Gold Jewellery Exports Hit Due to Halt in Metal Supply Over GST Confusion
“With the gold stocks procured prior to April, we could fabricate and export jewellery in that month. However, in May the exports have been hit. If the issue is not resolved the exports in June also will be affected.”
Chennai: The gold jewellery exports are hit due to the halt in the supply of duty-free gold through banks and nominated agencies with the confusion over IGST payment prevailing. Around 85 per cent of the gold supply has been hit by this.
The customs department has not been permitting the banks and nominated agencies to clear their consignments over a confusion regarding payment of IGST since March. Imported gold was exempted from GST at the point of customs. This exemption is renewed every year and the renewal order for the next year comes before the end of the financial year.
However, this time there was a delay from the part of the government in issuing the renewal order.
After a few weeks of delay, the banks cleared the consignments for the domestic industry after they started paying the IGST of 3 per cent. However, the IGST confusion on the duty-free gold for the exporters continues. As the exporters cannot claim the input tax credit, banks can neither charge nor exempt the GST in the absence of an order.
Hence, gold supply to the gold jewellery exporters has been disrupted since March.
These banks and nominated agencies import gold on a consignment basis upon bank guarantees and their imports account for around 85 per cent of the 75-80 tonnes of gold procured by exporters. Star trading houses, which account for around 10 tonnes, and channelised agencies like Diamond India Ltd, which is authorised by DGFT, are currently importing gold for the exporters. For the gold procured through DIL, the exporters have to pay the duties upfront.
“With the gold stocks procured prior to April, we could fabricate and export jewellery in that month. However, in May the exports have been hit. If the issue is not resolved the exports in June also will be affected,” said Prakash Pincha, regional chairman-East, GJEPC.
Earlier in April, the authorised banks and nominated agencies like Metals and Minerals Trading Corporation of India (MMTC) could not import gold due to the delay in the issuance of their renewed import licences by RBI. This had hit the gold supply of both the domestic as well as export segments. Though the licences to import gold were issued later in April, the order on IGST is still pending.
