Top Budget Expectations from the Bullion Industry

By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

Indian Bullion industry comprises around 6 lakhs jewellers and this thriving industry sustains approximately 4.3 million jobs, contributes about 10% to the country’s merchandise exports, and significantly impacts the overall economic growth. Therefore, Bullion industry participants expect many changes in this interim budget to make this industry more organised and transparent.

  • The bullion industry expects a reduction in import duty on precious metals from 15% to 4-8% and a reduction in import duty on cut and polished gemstones from 5% to 2.5%. This relief in gold import duty would encourage a level playing field between the regular and grey.
  • To make India a world-class diamond trading hub, various training centres should be opened for training new generation artisans for diamond cutting and polishing.
  • International trade of Import of Gold through the India International Exchange (IIBX) should be encouraged and a 5% special concession should be given to banks, bullion dealers, and jewellers, who import gold through IIBX.
  • Changes in the Gold Monetisation Scheme like exempting Interest Income from taxes should be made to make it more lucrative for Indian Investors.
  • The GST-certified and bonded warehouse should be built up to solve GST refund issues on trading Electronic Gold Receipt (EGR) on domestic spot gold exchange. In such warehouses, the trader doesn’t need to pay GST while offloading the bullion stock and doesn’t have to apply for a GST refund while selling their stock.
  • TDS and TCS on purchasing and selling gold jewellery should be simplified.
  • Bullion Imports is distorted by different duty structures by different countries through various free trade agreements. A standard import duty procedure should be in place rather than multiple duty structures for a level playing field. While the UAE CEPA agreement can be the exception and continued.
  • A jewellery export centre should be established in GIFT City, where domestic bullion dealers and jewellers can sell their jewellery to international customers.
  • NRIs should be given a GST refund of the gold jewellery purchases made by them in India when they return to their migrating country.
  • Credit Card commission limit should be reduced from 2.5% to 1% for jewellery purchases.
  • 3% GST on buying Gold Jewellery should be reduced or removed.
  • Capital Gain Tax on the sale of gold jewellery should be exempted.
  • Internationally renowned diamond broking and trading houses should be permitted to operate out of these SNZs to broaden further and deepen their reach.
  • To fully reap the benefits of the India-UAE CEPA, develop a “Rates and Taxes Refund” mechanism through the EDI system, similar to the GST refund. The reimbursement rate should be in line with the appropriate rates and taxes, notably import duty and GST, on the day of export.
  • Bullion Industry participants have to get approvals from various regulators like the Finance Ministry, Commerce Ministry, RBI, Consumer Affairs, IFSCA, etc for various issues, which makes decision-making time-consuming. Therefore, a single regulator is a need of hour for the Bullion Industry.

Above are the top 15 budget expectations from bullion industry players and participants. As the February Budget is going to be an Interim Budget, I think, the government would focus on ongoing investments and might not make major announcements in the bullion industry. If there are no changes made, these expectations will be carried forward in the final budget after the elections this year.




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