Surge In 'Gold Findings' Import Brings Tax Bonanza For Indian Jewellers
'Gold Findings' are those small pieces of jewellery used as connectors including pins, hoops, wires, beads etc, the imports of which have surged significantly in the past few months mainly in south India, sources told BW. Since these small pieces of jewellery attract an 11.3 per cent import duty compared to the 15 per cent collected by the government on other forms of gold imports, the jewellers have found a way to lower their tax burden on the yellow metal by importing Gold Finding in large quantities, the sources said.
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 a 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, 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 percent 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 mentioned.
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.
