Say members of city's gold association at peaceful protest rally at Azad Maidan yesterday
For Indians, every happy occasion is a reason to buy gold. Little wonder then that the mention of a price hike makes jewellers touchy.
Jewellers and gold traders congregated during a peaceful protest against
the proposed hike in excise duty on gold at Azad Maidan on Sunday.
Pic/ Bipin Kokate
Over 3,000 members of Mumbai Gold Association (MGA) gathered for a peaceful protest at Azad Maidan yesterday to oppose the Centre's proposition to increase the excise duty on gold from 2 per cent to 4 per cent in the Budget 2012-2013. Fearing it will adversely affect the gold industry in India, members have demanded a rollback.
"The hike will lead to smuggling, just like in the pre-1992 era when a ban on gold import was introduced," says Puran Doshi, an MGA member. The hike in excise duty will also increase the gold prices by Rs 2,000, he adds.
SK Goel, chairman of Central Board of Excise and Customs said that jewellers would have to pay just 0.3 per cent duty, which is only 30 paisa on a Rs 100 transaction, as per the new proposed rate.
Another member, on condition of anonymity, gave a simple explanation of how the hike would encourage smuggling. "For every kg of gold imported, we have to pay Rs 1.10 lakh excise duty as per the current prices.
However, one can easily import gold from Dubai, where gold is duty free. People can easily save up to Rs 90,000, in spite of paying Rs 20,000 for a return fare. In the same way, on purchasing 5 kg gold, people will save upto Rs 5 lakh," he says.
The hike in excise duty will hit small entrepreneurs the most. "They will be forced to run their shops with a high inventory cost," said Ramesh Lodha, another member of MGA. The Centre is losing Rs 800 crore of tax due to the strike that began yesterday, he adds. Meanwhile, PK Agrawal, commissioner of central excise, refused to comment.