The All India Gem and Jewellery Domestic Council (GJC) has sought immediate reduction in import duty on gold, besides other pro-urban and rural consumer-friendly measures while offering support to government in implementing gold monetisation and gold hallmarking schemes in a more successful manner.
In its pre-Budget recommendations, GJC has sought that all government schemes for MSMEs should be implemented and applicable to indigenous gem & jewellery sector, which is prominently represented by small and medium scale jewellers.
GJC is a national trade federation established for the promotion and growth of gems and jewellery trade across India. It represents manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and allied services.
GJC urged the government to extend the benefit of reduced income tax rate to even partnership (including LLP) or proprietorship firms. Tax rate for body corporate with annual revenue of less than Rs 250 crore a year was reduced to 25% from 30% in the last budget.
A majority of the players in the gems & jewellery industry are either partnership (including LLP) or proprietorship firms. GJC chairman Anantha Padmanaban said, “The high import duty on gold has increased socio-economic menace in the country in the form of smuggling of alarming proportions and the re-emergence of unorganised/illegal channels for procuring gold. Gold is our basic raw material and GJC is totally committed to helping the government unlock 22,000 tonne of gold in India households through a gold monetary scheme (GMS). GJC is committed to offering its counsel and intelligence to bankers to ensure that genuine organised jewellers get bank finances and benefits that are applicable to other MSMEs. GJC also supports the gold hallmarking initiative and is willing to provide support and infrastructure through its members spread across the country.”
The total deposits accumulated by banks under the GMS are only 11.1 tonne even though GMS was introduced in 2015. The idea was to turn gold holdings into an earning asset by allowing residents to deposit physical gold — bars, coins or jewellery — into a gold savings account. The idea was to mobilise domestic gold to be channelised for productive use in the system. The non-participation in the GMS has become a big issue, which has to be resolved, it said.
GJC also recommended raising PAN card limit from Rs 2 lakh to Rs 5 lakh. Every household during the weddings gifts the gold jewellery to their children as a blessing. A mangalsutra, four pieces of bangles, a small nose pin along with rings for bride and groom weigh more than 100 gm which itself costs Rs 3-4 lakh.
Gold is also viewed as a safe, secure and a time-tested investment. India is a country with strong traditional values. GJC has urged that the facility of EMI should be extended to the gems & jewellery industry which in turn shall lead to substantial growth of the business of the industry and therefore propel the growth of the economy.
Currently, loans on purchase of jewellery is being treated as personal loans, where the rate of interest is very high. EMI should be available for purchase of jewellery and restriction should continue only for bullion and coins. This will help the industry to move towards organised business practices. Even the finance minister in 2018 Budget had announced that jewellery is an asset class, according to GJC.
GJC requested the government that in case jewellery sold is reinvested in new jewellery, the exemption from capital gain according to Section 54F of the Income Tax Act 1961 should be the extended to G&J industry. This will help the industry to move towards organised and compliant business practices.
In case of remaking of new jewellery from old jewellery or old gold, GST is applicable at 18% on labour charges. Due to high rate of GST, the customers are reluctant to go for this option. The other option left with customer is to sell the old jewellery and buy new one. However, as there is capital gains tax involved, customers are hesitant for this option, it said.