All India Gems and Jewellery Trade Federation (GJF) wants Finance Minister Arun Jaitley to reduce the import duty on gold to 5% as against the current 10%. GJF Chairman GV Shridhar told CNBC Awaaz that the government should also consider increasing the amount beyond which PAN card is necessary for purchase of gold and jewellery to Rs 5 lakh. “The current limit after which one must furnish PAN card details for purchase of gold and jewellery is Rs 2 lakh, that should be increased to Rs 5 lakh. This needs to be done so that there is greater tax compliance. If the amount is not hiked then a lot of sales can happen without bills and tax invoice,” Shridar told the channel.
According to Shridhar, the current 10% import duty is the biggest problem for the gems and jewellery industry. “The current import duty is 10% and our demand is that it should be reduced to 5%. Jewellery is a value added product, the chances of parking your black money there do not exist. But in bullion that chance exists, and the import duty must be reduced so that people don’t park their black money in it,” he said.
Watch: Budget 2017 recommendations of Gems and Jewellery Federation
Shridhar is also urging the entire industry to go cashless. “We are urging the entire industry to go cashless. Once you go cashless, by default you come into the tax net,” he said. When asked why people would be willing to pay 2% extra for cashless transactions, given that purchase of gold and jewellery is already very costly, Shridhar said that only credit card payments invite the 2% charge. “You can always transfer money online through NEFT. This will ensure transparency withoit any extra charge,” he added.
GJF’s appeal to the government comes in wake of the ongoing heavy scrutiny post demonetisation. Also, with the PAN card rules and hallmarking becoming compulsory from next year, the GJF is asking for “some relief measures” in Budget 2017.
The Modi government has preponed the Budget this year and while the official date is yet to be announced the indications are that the financial statement would be presented on February 1, 2017. This year’s budget is special on multiple accounts. For one, this is the first time that the Railway Budget will form part of the main Budget. But more importantly, Budget 2017 comes within months of the demonetisation of old Rs 500 and Rs 1000 notes. There is widespread expectation that the government will announce a slew of measures to incentivise the use of digital payments methods. These measures may include tax incentives as well.