Current regulatory policies and higher tax regime have taken the sheen off the yellow metal, which is seeing subdued consumer demand even after the onset of the festival season, experts said.

The domestic gold industry has remained merely a bystander watching the festival buying coming to its end without any glitter, they said.

At a Senior Economists’ Roundtable, jointly organised by India Gold Policy Centre (IGPC) and National Institute of Public Finance and Policy (NIPFP), industry leaders, economists and experts said the weak consumer demand may be due to manyfactors such as higher imports duty, entry tax, octroi, excise duty and sales tax (VAT) and the overall economic slowdown.

The stakeholders called upon the government to address the issues on an urgent basis.

Working group formed

Speaking at the roundtable Saurabh Garg, Joint Secretary (Investments), Department of Economic Affairs, Ministry of Finance, said a working group has been formed to review the current regulatory policies on gold.

Arvind Sahay, Head of IGPC at the Indian Institute of Management - Ahmedabad, said, “An increase in customs duty to 10 per cent is an issue. It was, however, encouraging to note that the government appeared committed to bringing more transparency in the industry.”

GST regime

Under the Goods and Services Tax (GST) regime, if tax is levied at 4-6 per cent (with the proposed merger of all indirect taxes) and Customs duty at 10 per cent, the consumer will need to pay taxes to the extent of 14-16 per cent on purchase of gold. Gold traders are pitching for GST rate of 4-5 per cent.

Ashish Nanda, Director, IIMA, said, “Gold is an important asset, particularly in India. Policy makers and industry participants recognise the importance of having thoughtful and clear policies to appropriately regulate and nurture the industry for social benefit.”

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