While many do not want commodity transaction tax (CTT) to be announced in the upcoming budget, it has found favour with, at least, the federation of gems and jewellery traders.
At a press conference here, the All India Gems & Jewellery Trade Federation (GJF) said a CTT of 0.2 per cent on every transaction of exchange traded gold fund (ETF) be imposed as most of the ballooning imports of the yellow metal are going for the purpose.
"We are hopeful, this recommendation will make its way in the 2012-13 budget," said Bachhraj Bamalwa, chairman, GJF. CTT was earlier proposed in the 2008-09 budget presented by then finance minister P Chidambaram, but was never notified after objections from various quarters. "We want the government to increase margins from five per cent to 25 per cent of exposure in ETF," Bamalwa said.
To support the domestic industry, the federation demanded restoration of specified duty at the rate of Rs 40 per gram of gold. In December, the government restructured the import duty on gold to two per cent of the value of imports, instead of Rs 300 per 10 grams.
The Prime Minister's Economic Advisory Council (PMEAC) has estimated gold imports to reach $58 billion this financial year, against $33 billion last year and attributed the surge to lack of other attractive options. GJF claimed that even though gold imports have risen in value terms, in volume terms it did not go up much.
It is estimated to touch 969 tonnes in 2011-12 against 963 tonnes in 2010-11.The increase in value terms could be attributed to increase in international gold prices and depreciation of rupee. In fact, GJF's former chairman Vinod Hayagriv said the consumption of gold imports by the gems and jewellery industry shrunk by 25 per cent this year.
PMEAC Chairman C Rangarajan had earlier raised concern over rising gold imports. Gold imports are the highest after oil imports.
GJF members agreed that gold imports should be discouraged to some extent, through taxing ETF, but gems and jewellery sector should get enough supply.
Also, the federation asked the government to reduce the baggage carriage of gold by non-resident Indians from the existing 10 kg to 1 kg.
“This will encourage the NRIs to bring in foreign currency to the country and improve our forex reserves, besides curbing illegal import of gold,” GJF said in a statement.
The federation requested the government to increase the jewellery purchase limit without quoting PAN (permanent account number) card number to Rs 25 lakh from the existing limit of Rs 5 lakh, pointing out that over 70 per cent of the customers of the G&J industry are from the rural areas many of whom do not have PAN cards.
