Tax burden on gold should decline under GST regime, suggests WGC
The World Gold Council on Thursday urged the government to reduce the tax incidence on gold and gold products under the new Goods and Sevices Tax regime.
"In the GST regime, we urge and expect that the total tax burden on gold be halved from the current level of around 12 per cent," WGC managing director Somasundaram PR said here on Thursday during launch of a new comprehensive India gold report in Bengali.
The report is published after 15 years and is also available in English, Hindi, Malayam and Tamil for a ready reference to Indian gold industry.
Currently, total taxation comes to between 12 and 13 per cent. Custom duty is 10 per cent, excise is one per cent and VAT of 1-1.5 per cent depending upon states.
"In the GST regime, we demand the total tax burden on gold to be not more than 6-7 per cent. but, we have to wait for a few days more when the GST rates on gold is expected to be announced," Somasundaram said.
He tried to convince that gold import was not as bad as was perceived to be when asked why government should offer low tax on gold which is an idle asset and contribute a lot for current account deficit.
"According to a 2014-15 report of PWC, value addition in gold is to the tune of $30 billion with a lot more scope. Gold loan is also to the tune of around $10 billion with about 1,250 tonne as collateral allowing persons access to credit be it formal or informal," Somasundaram said. Hoping GST will bring lot of transperency in the gold industry including check on illgeal imports which is about 120 tonnes a year now. But it will take few months industry to get stabilised, the WGC official said.
Somasundaram said government should promote gold investment through ETF with tax breaks rather than physical gold. He reteriated that the country needed a gold policy that would help all stakeholders.