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Allow NRIs to buy gold from foreigners to claim GST reimbursement on their return (Expectation from Budget 2021)
The gem and jewelry sector is hoping for a positive result from the budget 2021. The gem and jewelry sector is making a major contribution to the overall economy of the country. And just like last year's budget for this year also has high expectations, the fraternity is hoping for a positive result from the budget 2021. Analyzing that the current government believes in fostering and promoting a business-friendly environment, we are hopeful that they will raise some of the sector's issues that will support the industry. The wishes and expectations from the Union budget 2021 are as follows.
- Providing Allowance to foreigners on the purchasing of jewelry in India;
International tourists and non-resident Indians (NRIs) visiting India do not invest in gold jewelry as they did earlier, as there is no procedure to reimburse the GST on their purchase which they are otherwise entitled to claim. The Integrated Goods and Services Tax Act of 2017 permits a foreign national or NRI who enters India for a stay of fewer than six months to claim a GST refund after leaving India. Gold jewelry has a GST of 3 %. The tax aspect is very important because of the high valuation of the commodities and it has become one of the key factors for tourists to buy Gold Jewelry in India.
- Indian refiners are licensed to import Dore bars from overseas gold mines
At present, only one company is LBMA in India certified gold refinery. & In Switzerland, its parent company has entered into a huge supply deal with Dore bar for large and established mines. Therefore, only small and artisanal mines are able to source the majority of the small or medium Indian refineries, which raises the supply risk. In the past, a supply of Dore bars was allowed by foreign banks like JP Morgan and Standard Bank or ANZ Bank or International refineries like Valcambi or Metalor. However, the current regulations are a major obstacle to small and medium-sized refineries, and only one refinery can directly procure them. The Government should limit this monopoly in this budget and allow the shipment of Dore bars to India from other authorized LBMA certified refineries or foreign gold supplier banks authorized to supply pure bars to India.
- 12.5 % cut in customs tax on precious metals
Gold from countries such as South Korea and Malaysia, with which India has signed Free Trade Agreements (FTAs), has resulted in several rises in import duties on precious metals, thereby increasing price competition in domestic markets. Manufacturers/retailers/bullion importing agencies/refiners and many others participating in tax compliant business systems are affected by the resulting gap in the price of official gold imported through the banking channel and unofficial imports. Indirectly, the high import duty causes a disincentive for the organized players in the industry. A lower Basic Customs Duty (BCD) on gold could help render the unofficial path unattractive for gold imports.
