Page 16 - Bullion World Volume 02 Issue 08 September 2022

Bullion World | Volume 2 | Issue 09 | September 2022

2 The capital gains tax on sale of old gold is a The capital gains tax on old gold sales shall
major factor that hinder the monetizing of old be withdrawn, so as to incentivize more gold
gold holdings. holders to deposit and monetize their old gold
under the GMS.
Gold price in 1994 was Rs.250 per gm, after 28
years in 2022, it is Rs. 5200 per gm, inclusive of The tax recovery /revenue foregone from capital
18% govt levies. Selling the old gold purchased gains tax shall be more than compensated by the
decades ago, to the GMS scheme incurs huge savings in precious foreign exchange, CAD and
capital gain tax. rupee depreciation.

3 The 3% GST deduction by registered dealers The 3% GST for gold, shall be offset /
while buying old gold is huge money loss for compensated with credit note /pass book or
the customer and is a major negative factor/ voucher ,which they can utilize while buying
deterrent for depositing / monetizing domestic their next lot of new jewellery from gst registered
old gold in the GMS dealers

To evade the burden of capital gains tax and GST, Another option to offset the 3% GST impact on
old gold is often sold to unregistered jewellers and old gold purchase is to reduce the GST to 1%,
other grey market operators. Every year around and shifting the 2% of GST to the basic import
200 tonnes of old gold is getting monetized in this duty.
parallel economy, mostly to evade capital gains
tax, cheque payment and deduction of 3% GST Reducing the GST on gold to 1% will also
reduce the gst refund burden for gold sales to
the spot gold exchanges and gold sale under
demat form

4 The banks are not having enough gold loan To make GML from GMS deposits attractive
products to deploy the medium and long term for the banks and jewellery trade, the tenure
GMS gold deposits in a profitable manner The of GML from GMS shall be extended to 1 year
existing gold metal loans ( GML) offered by banks period, similar to CCOL working capital loans
have a short tenure of 180 days – such short term from banks to jewellery shops ,with a provision
GML is not useful for the jewellery trade, because for renewal every year, similar to CCOL annual
of the frequent fluctuations in gold price, and renewal facility
hence banks may find it difficult to deploy the long
tenure GMS gold deposits as GML to the jewellery We thankfully acknowledge that the Govt and
trade. RBI has permitted gold to gold settlement of
GML in the case of GMS gold, which is very
positive for GMS deposits

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