Duty hike to be bane for gold business: Jewellers

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Local jewellers urged the government to cancel the proposed duty hike on gold import, which they said could affect their business badly.

They think the government should adopt stricter measures to prevent smuggling rather than increasing duties.

Finance Minister AMA Muhith proposed raising duty on all gold imports to Tk3,000 per tola (11.66g) from the present Tk150.

Muhith also proposed 3% value added tax on jewellery services, which is 2% at present.

At present, gold traders pay Tk150 per tola as import duty plus a 4% advance income tax.

Over 10,000 jewellers partially depend on recycling gold brought home by Bangladeshi migrants, but the proposed duty hike may discourage them, said Aminul Islam, general secretary of Bangladesh Jewellers Samity (BJS).

“The surge in duty by 20 times will increase revenue for the government, but many expatriates will not be able to afford it,” he argued.

“Besides, lowering the limit of gold ornaments that a passenger may carry in total up to 300 grams may disappoint them.”

Another BJS official alleged the budget did not reflect any of the association’s demands which were placed at a pre-budget meeting with the National Board of Revenue (NBR).

“Not even the long-standing demand of a gold policy, which the neighbouring countries already have, was met,” the official said.

Rationality behind 20-fold hike

The twenty-fold hike in duty is planned apparently to discourage smuggling to neighbouring India, where the duty for the precious metal is more than 2000% higher.

“The rationality on the proposed hike on gold duty is mostly due to the recent increase in gold smuggling,” Muhith said in his budget speech for FY2014-15.

The minister also proposed decreasing the amount of duty-free gold ornaments each passenger is allowed to bring into the country to 100 grams from the existing 200 grams.

Individuals who are residents in Bangladesh may still carry an additional 200 grams of gold jewellery or bars per head after paying the proposed duty.

The proposed measures are aimed at stopping the rising trend in importing gold at low cost, and then smuggling it to India for profit.

Recent data by the NBR suggests a sharp rise in legal inflow of gold within baggage rules in the past few months.

“A very low gold import duty, compared to that in India, encourages smugglers to import gold to Bangladesh and then smuggle it out to the neighbouring country,” an NBR official said, asking not to be named.

“To lower the gap of over 2000% in gold duties between Bangladesh and India, such measures and unusual hikes were inevitable,” the official added.

However, India’s Trade Secretary Rajeev Kher recently suggested India would need to “rationalise” duty on gold imports, which plunged 72% in May, said Reuters report.

Following a steep rise in the country’s current account deficit, India raised gold import tax last year to 10% from 4%.

Source: Dhaka Tribune

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