The All Kerala Gold & Silver Merchants Association has made a compelling plea to the Union Finance Ministry for a reduction in the basic customs duty on gold. The recent escalation of the import duty from 7.5% to 15% has markedly driven up production costs, creating a substantial economic burden on domestic manufacturers and exporters.
B. Govindan, the association’s president, highlighted the severity of the situation, pointing out that the increased duty has led to additional taxation surpassing ₹9 lakhs per kilogram. This dramatic surge threatens the viability of the gold trade, an industry critical to the state’s economy.
In a detailed pre-budget memorandum submitted to Finance Minister Nirmala Sitharaman, the association proposed several key measures to invigorate the sector. They advocated for reducing the GST on gems and jewelry to 1.25%, a move that would not only make these items more affordable for consumers but also stimulate market demand significantly.
Another crucial recommendation was to raise the PAN card limit for mandatory quoting from ₹2 lakhs to ₹5 lakhs. This adjustment would streamline transactions, ease the compliance burden on merchants, and promote greater transparency. Furthermore, increasing the cash purchase limit under Section 40A of the Income Tax Act from ₹10,000 to ₹1 lakh for claiming capital gains tax relief would incentivize legal cash transactions and enhance market liquidity.
The association also emphasized the need for innovative financial solutions, such as introducing EMI options for purchasing 22-karat gold jewelry. This would promote digital transactions and ensure that buyers have flexible payment methods while maintaining necessary restrictions on bullion and coins.
Revamping the Gold Monetization Scheme (GMS) was another priority. The association called for exemptions for ancestral gold from taxation under the GMS, encouraging households to deposit up to 500 grams of such gold without tax implications. This initiative would likely increase participation rates and integrate more gold into the formal economy.
To further streamline the industry, the association suggested minimizing the physical movement of gold and enhancing banking participation to improve accessibility. Partnering with religious institutions to raise awareness about the GMS and lowering the minimum deposit requirement were also recommended to attract a broader range of participants.
These strategic proposals aim to fortify the domestic gold industry, ensuring its resilience and capacity to contribute to the national economy amidst fluctuating global markets.