BW Impact: Government Hikes Import Duty On Gold Findings To 15%
Government has moved to hike taxes on the imports of 'gold findings' after a report in BW Businessworld on 31 December 2023 revealed that its imports had surged in the past few months and how it was giving tax bonanza to jewellers.
'Gold Findings' are those small pieces of jewellery used as connectors including pins, hoops, wires, beads, etc. BW had reported that jewellers, mainly in South India, were importing Gold Findings and melting them to make other jewellery, which gave them a tax bonanza of 3.7 per cent since Gold Findings were taxed at 11.3 per cent compared to 15 per cent tax on normal gold.
Rough estimates by bullion market veterans suggest that in the past few months, India was importing anywhere between 300 to 500 kilograms of Gold Findings every day. While there is nothing illegal in importing Gold Findings, it can be melted and recast into any form of gold jewellery thereby giving 3.7 per cent tax benefit compared to importing gold at 15 per cent duty in other forms, the sources said. Chennai and Delhi are preferred customs points for large quantities of Gold Findings from the middle-east, the sources added.
South India dominates Indian gold jewellery consumption, accounting for 40 per cent of the country's total jewellery demand. India imports around 900 tons of gold annually and around 80-90 per cent of it goes into jewellery making. Hence, the other view is that largely the 300 to 500 kg of Gold Findings could be easily getting absorbed by jewellers in their routine business. Still, if the trend of the past few months continues, Indian jewellers will end up importing around 10 per cent of the country's total gold in the form of 'Findings,' rough estimates by the sources say. Approximately this is likely to result in Rs 3000 to Rs 4000 crore worth of tax benefits (considering today's price of gold at over Rs 60,000 per 10 grams) if the annual imports of Gold Findings cross 100 tons, which is possible going by the trend of the past few months, the sources said. But the jewellers say that Gold Findings come mainly in 18 carat and hence the tax outgo is lower.
India’s gold market is dominated by demand for plain 22-carat gold jewellery, although demand for 18-carat studded pieces has increased in recent years driven by younger women consumers who love to show-off the bling of studded jewellery. Bullion shop owners also say that demand for Gold Findings will remain high since each year more than a million marriages take place in India and hence jewellery demand is way higher than gold coins and bars.
