Union Budget 2012: Jewellers demand simple tax regime, abolition of gold ETFs

NEW DELHI: Various jewellery bodies have demanded a simplified tax regime and abolition of gold ETFs to lure customers in buying the precious metal.

All India Gems and Jewellery Trade Federation in its pre-budget memorandum has asked the government to introduce 25 per cent commodity transaction tax (CTT) on Gold ETFs.

Gold ETFs are exchange traded funds of gold and a person can hold units of gold in demat form in more cost effective manner. The funds also offer liquidity on stock exchanges.

The diamond industry appealed to Finance Minister Pranab Mukerjee to introduce presumptive tax regime under which the industry is charged on an average rate of 1-3 per cent of their profit margins.

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The Gems and Jewellery Export Promotion Council (GJEPC) is of the view that 80 per cent of the diamond industry is earning an average profit of 3 per cent due to tough competition from countries like Dubai which has a tax free regime.

The gems and jewellery export industry employs 1.5 million people and out of 15 types of diamonds traded in the world, 14 get polished in the country.

In 2010-11, gems and jewellery exports were worth $43.14 billion.