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24
Aug 2018
 |
Gold
(The Total Investment & Insurance Solutions)
Government think tank NITI Aayog has
suggested the government to bring down import duty on gold from the existing
level of 10 per cent and also slash the GST rate on the precious metal from the
current 3 per cent.
It has also recommended the government to
review and revamp the gold monetisation scheme and the sovereign gold bond
scheme and introduce new gold savings account in banks besides setting up of a
gold board and bullion exchanges across the country to have greater
financialisation of the yellow metal.
In its latest report, the committee headed by
NITI Aayog Principal Adviser Ratan P. Watal said: "A reduction in the
customs duty in the past in India has been argued to support tax compliance
coupled with a significant reduction in the quantum of gold smuggled into
India.
"In this context, to create a tax
compliant system within the sector, it is important to reduce the basic customs
duty on gold to as low as possible."
The committee also suggested exemption of 3
per cent Integrated Goods and Service Tax (IGST) to be paid by exporter on line
with custom duty with a provision of bank guarantee. The Total Investment & Insurance Solutions
This IGST exemption should also be extended
to the supply of gold by foreign buyer, it added. The Total Investment & Insurance Solutions
Besides, the committee said there should be
reduction of GST on gold from 3 percent to appropriate levels. Job workers
receiving gold from other states may be considered for exemption from obtaining
GST registration.
Further, it said the threshold for exemption
under GST, which at present is Rs 20 lakh, should be revised on the basis of
value-added, which can be determined by using average ratio of value added to
value of sales for the sector concerned.
Also, the GST rate for repair service of
jewellery should be reduced from 18 per cent to 3 per cent. The Total Investment & Insurance
Solutions
The committee has recommended scrapping of
commodity transaction tax (CTT) on gold derivatives and provision for capital
gains tax exemption for gold related financial instruments. The Total Investment & Insurance Solutions
With regard to gold monetisation scheme
(GMS), the committee said the finance ministry must review and revamp the
scheme, with time-bound targets that may be set through a comprehensive gold
policy.
It also said that banks should be encouraged
to set up more branches to accept gold deposits under the GMS, allow deposits
as low as one gram, and multiples thereof, and exempt the transfer of gold
collected under the GMS from the purview of the GST. The Total Investment & Insurance Solutions
The committee, which was constituted to
recommend measures to transform India's gold market, suggested introduction of
a new financial product for banks 'Gold Savings Account', that will accept
rupee and credit grams of gold, with passbook facility. The Total Investment & Insurance Solutions
It also proposed to set up a new body 'The
Gold Board of India' and bullion exchanges under the Ministry of Finance. This
would be positioned as a single window one stop interface – assigned the
responsibility to formulate policies.
Gold as a foreign exchange asset would
continue to be professionally managed by the regulator RBI, it added. The Total Investment & Insurance
Solutions
The committee said the report provides a
robust foundation for realising the policy intent stated in the Union Budget
2018-19 of developing a comprehensive Gold Policy to develop gold as an asset
class and outlines the way forward for realising the transformational potential
of India's gold market.The Total
Investment & Insurance Solutions
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