The rollout of the Goods and Services Tax (GST) on July 1 will get gold out of the shadows of black money and establish traceability, Somasundaram P. R., managing director, India World Gold Council said.
There was a lack of clarity on the rate and on certain operational issues and the transition would be a time-consuming affair, he said.
“It may take about 18 months for the industry to settle,” he said. “There are several areas that need clarity.. the industry is seeking the definition of conversion.. how would the taxation be if gold jewellery is exchanged,” he said.
Mr. Somasundaram felt that there were major gains to be reaped from the rollout of reform measures like GST. “This is the best way to make gold buying transparent,” he said. However, GST rollout should ideally be accompanied by enforcement of hallmarking to ensure purity. “Or else there will be a gap.”
Assaying centres
Certain inadequacies existed with respect to hallmarking facilities, Mr. Somasundaram said. This was in respect of the number of assaying centres as well as gaps in standardisation. “Nearly 1,000 assayers would be needed (against the 450 available now) if hallmarking is made mandatory.”
As per a WGC report on the evolution and innovation of India’s gold market, income levels were the most significant long-term determinants of consumer gold demand. The report pegged India’s gold stocks at around 23,000 tonnes. It said that South accounted for 40% of the gold demand, followed by West with 25 %, North 20% and East 15%. Imports account for 85 % of the supply.
The number of jewellers has been estimated between 3.85 and 4.1 lakh of whom 70% were unorganised. However, the market share of organised player has increased from 5 to 30 % , in the five years since 2000, and is projected to rise to 40% by 2020, according to the report.
