Gold traders seek rollback of hike

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Over three lakh jewellery merchants across the country are fighting tooth and nail with the Centre for rollback of the recent excise duty hike proposals which they fear “will kill the legal business”.

Miffed at the Budget announcement that hiked excise duty on gold and platinum from 2 per cent to 4 per cent and included unbranded jewellery in the ambit of 1 per cent excise duty, jewelers have been downing the shutters, going on hunger strikes and taking to streets.

Traders are upset because they feel that the excise duty would encourage Inspector Raj and could resume the gold smuggling activity that was under control for a couple of years now.

The requirement to produce the PAN card for gold purchases above Rs 2 lakh is feared to encourage illegal stocking of the metal, leading to more bribes and black money.

Many recall about the Gold Control Act, 1962, that killed the official gold market. The Act which came into effect as a fallout of the Chinese aggression prohibited people from holding pure gold bars and insisted on complete disclosure of their gold possessions while restricting trade licence. All this led to increased smuggling activity.

“It may happen again. We are not ready to stop our protests until the government announces a complete rollback,” says Mr N. Anantha Padmanaban, president of Gold Club of Chennai.

Over 2,000 traders in Chennai alone have been protesting against the hike losing a daily business of Rs 50-60 crore.

There is a greater fear that the duty hike, which translates as increase in gold prices up to Rs 800-1,000 per 8 gram of gold, may hit the all-consumer buying quite hard.

“The government could have actually put a PAN card tab on purchases about Rs 4 lakh to start with,” says gold management consultant Dr R. Pattabiraman.