MUMBAI: To curb grey market and boost the organised players, the Gem and Jewellery Export Promotion Council (GJEPC) is expecting Finance Minister Arun Jaitley to reduce the import duty on gold to around 5 per cent in the upcoming Union Budget.
"We are expecting the Finance Minister to reduce the import duty on gold to up to 5 per cent to boost the organised players in the country. Any duty on gold that is beyond 5 per cent encourages the grey market," GJEPC Chairman Praveen Shankar Pandya told PTI here.
He said a high import duty of 10 per cent has hampered the export of jewellery due to blockage of high amount of capital and has increased probability of trafficking of gold through parallel channels into the country.
"Due to spurious gold entering the country through smuggling, our exports will be termed as non-complaint under Organisation for Economic Co-operation and Development (OECD) rules of sourcing conflict free gold," he added.
Besides reducing import duty, GJEPC is expecting the Central Board of Direct Taxes (CBDT) to give relief to the trade under levy of penalties for non-maintenance of adequate transfer pricing records.
"After 10 years of records in a particular assessment under transfer pricing with change of assessing officer, penalty has been levied. Penalty has been levied for non-maintenance of records, which has been accepted by the department for past 10 years is impractical."
GJEPC asked the Government to follow the equivalence principle when preparing Goods and Services Tax (GST) Regime. "We are requesting NIL rate of duty on export of diamond under GST regime on the basis of equivalence principle."
"Currently, India processes 93 per cent of the world's cut and polished diamonds. The rough diamond import attracts NIL duty. The subsequent sale to MSMEs, all located in Gujarat are also without any VAT. SMEs, after doing the various processes, then resale to exporters, which is also without any VAT. Labourers paid for processing diamonds are free of service tax. Hence, any levy of GST in this cycle will severely impact the eventual exports of diamond," he said.
GJEPC demanded the Customs allow job work for diamond, precious and semi-precious stones.
Job work is processing or working on goods supplied by another person to complete a part or whole of the process and can be undertaken for the initial process, intermediate process, assembly, packing or any other completion process or complete manufacturing.
"Currently, job work scheme is available for other sectors. But there is no guideline specific to the gems and jewellery, which leads the industry players to import diamonds for cutting and polishing and undertaking other processing activities on job work basis," Pandya said.
Source: economictimes.indiatimes.com