KOCHI: Sijo Yohannan is a small businessman in Thrissur, Kerala. While most others are looking toward the Budget for tax sops, Yohannan is keenly watching the direction of gold prices. He intends to invest in gold but is waiting for the prices to come down.
And, prices could indeed come down if the government accepts jewellers’ demand to cut import duty on gold, points out M P Ahammed, Chairman, Malabar Gold and Diamonds.
“The reduction of gold import duty from 10 per cent to 6 per cent has been a long-pending demand from the industry. Lowering the duty structure will not only revive sagging customer demand, it will also uplift business sentiments. We hope that the upcoming Budget respects the sentiments of the sector and a policy decision is made accordingly,” Ahammed adds.
But how will this benefit the common man? “If the duty is reduced to six per cent, the four per cent benefit will be directly passed on to customers. Also, gold smuggling will automatically come down as the ‘rate of smuggling’ is usually two per cent lesser than the official duty,” explains Daman Prakash Rathod, a director at MNC Bullion.
Echoing the same sentiments, T S Geena, a home maker in Kochi, says it is the duty of the finance minister to offer some relief after the demonetisation pain. She hopes the Budget will have some measures to encourage spending on gold. According to her, the Budget should also offer some clarity on how much gold she can possess.
Nitin Khandelwal, chairman of All India Gems and Jewellery Trade Federation, wants the goods and services tax (GST) rate to be 1.25 per cent for the gems and jewellery sector. Also, gold purchase up to `5 lakh should not require PAN, he says.
Import of gold is now confined to banks and nominated agencies. Khandelwal says more agencies should be given the opportunity to be enlisted to allow good competition and easy availability of gold across the country.
Hareesh V, research head at Geofin Comtrade, says that there are two options available now — gold exchange traded fund and sovereign gold bonds.
“People are now moving towards gold bonds, which give 2.5 per cent return, exemption from tax and can be traded on the exchanges. Gold ETF gives good returns. The Budget is likely to provide measures to encourage these instruments.”