In a compelling plea to the Union Finance Ministry, the All Kerala Gold & Silver Merchants Association has underscored the urgent need to revise the basic customs duty on gold to invigorate domestic production and stimulate exports. This call to action follows a substantial hike in import duty from 7.5% to 15%, a move that has markedly escalated production costs and imposed an additional tax burden exceeding ₹9 lakhs per kilogram, as highlighted by B. Govindan, the Association’s president.
The association’s meticulously crafted pre-budget memorandum, addressed to Finance Minister Nirmala Sitharaman, advocates for a reduction in the GST rate on gems and jewelry to 1.25%. Such a measure, they argue, would enhance consumer accessibility and drive demand, vitalizing the industry. Furthermore, the memorandum proposes raising the PAN card limit for mandatory quoting from ₹2 lakhs to ₹5 lakhs, a change that would streamline transactions and alleviate compliance burdens.
In a bid to incentivize transparency and reduce reliance on cash transactions, the Association also recommends 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. This change would foster a more open and accountable market environment.
A visionary approach to modernizing the gold trade also includes introducing EMI options for purchasing 22-karat gold jewelry, thereby promoting digital transactions while maintaining stringent controls over bullion and coins. The association has also emphasized the need to revamp the Gold Monetization Scheme (GMS). They propose exempting ancestral gold from taxation under the GMS and consider tax exemptions for households depositing up to 500 grams of ancestral gold to boost participation rates.
To streamline the gold trading process further, the Association calls for minimizing the physical movement of gold, encouraging broader participation from banks, and partnering with religious institutions to raise awareness about the GMS. Reducing the minimum deposit requirement is also seen as a critical step towards attracting a more diverse range of participants.
This multifaceted appeal not only aims to bolster the domestic gold industry but also to align it with modern economic practices, ensuring its sustained growth and contribution to the national economy.