SEATTLE (Scrap Monster): The gold industry in India expressed fears that the proposal to hike GST rates on gold jewellery is likely to derails the entire industry in the country. Any such hike may lead to dip in demand for the yellow metal, which is seen rebounding from the Covid-19-induced weakness. Incidentally, reports suggest that the government plans to raise the GST rate on gold jewellery from existing 3% to 5%.
According to Tanya Rastogi, Director, Indian Bullion Jewellers Association (IBJA), the proposed move to hike the tax rate is feared to reinvigorate the parallel economy, thus hindering the recovery of gold sector.
The hike in GST rate will make gold even more expensive in the country, which happens to be one among the most expensive places to buy gold. The move will hence boost unorganized and illegal gold trading, which in turn may badly impact organized retailers. The hike in duty will result in black marketing of gold and gold smuggling into the country. Furthermore, the move is expected to boost purchase of gold jewellery from unreliable sources, so as to evade bill purchases.
The industry participants noted that the gold jewellery sector in the country is currently hit by new policy implementations such as mandatory hallmarking requirement. The GST hike would turn out to become another burden for the already struggling industry.