On June 3, the Goods and Services Tax (GST) Council will finalise the tax rate on gold, among four or five items that were left uncovered in the previous GST Council meeting on May 18-19. The jewellery industry is hopeful of a lower rate on gold even as it braces up for a higher rate.
In an interview with International Business Times India edition, Pratap Kamath, CEO of Abaran Jewellers and founder-member of the All India Gems and Jewellery Trade Federation (AIGJF) shares his views on the subject and the likely impact on the Rs 3 lakh crore trade. Edited excerpts:
International Business Times (IBT): What would be the GST rate on gold?
Pratap Kamath (PK): We have been requesting for 1.25 percent but the feeler that we are getting is that the government is looking at 4 percent.
IBT: Did any delegation from AIGJF meet ministers or officials in this regard?
PK: Yes, we had many meetings and we have one more scheduled...our (AIGJF) chairman Nitin Khandelwal will be meeting finance minister Arun Jaitley either on May 29 or 30. A meeting with the under-secretary in the finance ministry has also been scheduled.
IBT: To make a case for 1.25 percent GST on gold?
PK: Yes, that's right.
IBT: How hopeful are you?
PK: We are very positive...the fact that the GST Council has kept a decision on gold pending till now is an indication...see at 1.25 percent, compliance will be high, which is what the government wants. If they fix the rate at 4 or 5 percent, compliance will be very low. As it is, the import duty on gold is very high, at 10 percent.
IBT: How would gold prices trend post finalisation of GST rate?
PK: I don't think much... it would be in the range of 2 to 4 percent, up or down, depending on the rate.
IBT: How do you think demand for physical gold has been impacted due to gold bond schemes?
PK: It's not significant but yes, of late, it is picking up.
IBT: How do you foresee the initial days of post GST era for the trade?
PK: There will be some disruption for the next few months as traders come to terms with compliance and other issues.
IBT: How was the quarter (January-March 2017) gone by and the next two months?
PK: Very bad for us...on an average, it was down 30 to 40 percent, YoY and even now, it has not picked up much. Demonetisation severely affected our business. There was a general sense of fear among buyers but we are hopeful that things would improve in the next few months.
IBT: What's your view on the Modi government's performance in three years?
PK: We are in a nascent stage...most decisions that have been taken are drastic...and of course, with all the good intentions. But the results will be felt only in the long term.
