Gold jewellery retailer Malabar Group urges govt. to reduce tax rate

Gold jewellery retailer Malabar Group has asked the government to reduce import duty on gold and GST should be reduced to 7 per cent to curb large-scale gold smuggling in the country. This would also boost gold trade and strengthen consumer confidence and demand for gold jewellery.

Voicing his thoughts, Malabar Group chairman MP Ahammed said that the government should create an enabling environment for the jewellery retail trade to introduce MRP pricing in the segment without any pricing break-up in terms of GST or other taxes. MRP-based billed transactions would, in a way, make the jewellery retail trade tax-compliant and boost the government’s tax collection.

“At present, gold attracts 12.5 per cent import duty and 3 per cent GST and total duty and GST implication work out at 15.5 per cent. Such high taxes have led to large-scale smuggling and tax evasion. Therefore, reducing import duty-GST implication to 7 per cent is an effective measure to prevent those industry malpractices,” he said.

Ahammed explained that although the tax and duty implication is 15.5 per cent on gold, the actual implication comes to around 20 per cent after adding the mining royalties. Several countries such as the US, China, Singapore, New Zealand, Malaysia, the UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling.

The gold and diamond trade together account for 7.5 per cent of the country’s GDP and 14 per cent of the country’s total exports. About 60 lakh people are employed in the sector, he added.