Gold customs duty hike worries Jaipur jewelers
Jewelers and gold traders in Jaipur have expressed concern on the Union Budget 2019 increasing the customs duty on gold and precious metals from 10 percent to 12.5 percent.
"The customs duty on gold has been increased. There's already a provision of 3 percent GST. The customers now need to shell out 15.5 percent extra on buying gold, which is quite high. This will definitely affect the demand in the market and boost smuggling which is already high in Jaipur," said Sanjay Kala, President, Jewellers Association Jaipur, one of the oldest trade associations in India.
"The normal range of customs duty should be between 4-6 percent to help decent trading and keep a check on gold smuggling. The 12.5 percent levy will only lead to increasing in gold smuggling, posing a challenge for those who want to trade legally," he said.
Kala also expressed happiness on Jaipur being named a UNESCO World Heritage Site. "After receiving the Budget blues, we received the good news that Jaipur is now a UNESCO World Heritage Site. It will increase the number of tourists to the city.
"But what worries us now is that due to the high customs duty, these foreign shoppers will shy away from buying gold from India and instead make purchases in the neighboring countries which have lower tariffs," he told IANS.
"Foreign tourists coming to India should be given a duty waiver on purchases at the airport or we will lose them to other countries," he said.
According to customs officials, cases of gold smuggling have already been doubled in 2018-19 as compared to last year with several smugglers caught at Jaipur airport in the past two years.
Subhash Chandra Agrawal, Commissioner - Customs-Jaipur agreed: "Jaipur Airport has seen a jump in the seizure of gold.
According to Agrawal: "The high taxation is aimed at discouraging gold import, which is one of the biggest foreign exchange drainers. Gold is not even an essential item like fuel to spend foreign exchange on. But people buy gold and keep it, which is not a very good use of resources as it does not contribute to expanding the economy or the GDP."
The Customs Act 104 says any person found smuggling gold worth under Rs 1 crore can easily get bail. The case goes to court if the smuggled gold is over Rs 1 crore.
"Hence, smugglers do not care about getting caught once or twice. For 1 kg of smuggled gold, the smugglers get a profit of Rs 3 lakh, said sources