Jewellery traders demand VAT be decreased to 1.5% on gold sales
Jewellery traders have demanded a 1.5% VAT on sale of gold jewellery or just a 15% VAT on making charges of ornaments to protect the industry.
The Bangladesh Jewellers Samity (BAJUS), the apex organization of gold and jewellery traders of the country, made the demand in a letter to the finance minister recently in their reaction to the proposed budget for FY2021-22.
The letter, signed by BAJUS President Enamul Haque Khan and General Secretary Dilip Kumar Agarwala, said that despite being an ancient, potential and sensitive industry, the budget of FY22 did not have any directives to protect the jewellery industry.
According to the jewellers’ association, gold traders of the country import gold bars from dealers with 5% VAT.
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Then the traders collect 5% VAT from the customers while selling the jewellery.
As a result, there is a 10% additional VAT in the jewellery sector, which they say is very high.
Khan said that they have conveyed two proposals to the finance minister for the development of the jewellery industry.
“As gold is a precious metal, 5% VAT at the customer level is high. As a result, low-middle income customers of the country are reluctant to pay VAT and on the other hand, affluent customers are buying jewellery from abroad by taking advantage of tourist visas and rejecting high VAT rates,” he also said.
Moreover, the rate of import duty is also very high. Traders currently have to pay Tk2,000 for every bhori of gold imported from abroad, Khan added.
“We have demanded to re-fix this rate at Tk1,000 per bhori. Our proposals were not reflected in the budget. That is why we have sent a letter. If the government accepts this demand, it would be helpful for the development of this industry,” said the BAJUS president.
According to the association, though the country's artisans are the best in making handmade jewellery, customers are losing interest in buying local jewellery due to extra VAT.
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So, the country's money is going abroad and domestic outlets are running out of buyers. It hinders the development of domestic industry severely.
The government is losing a huge amount of revenue because of this, said BAJUS.
“In this case, the VAT on gold selling should be fixed at 1.5%. The government should impose 15% VAT on the jewellery making charges, like other countries of the world. Only these initiatives may save one of the most ancient industries of the country,” said Enamul Haque.
Asked about the letter, Dilip Kumar Agarwala said: “The proposed budget of FY2021-22 is said to be the most business-friendly budget but none of our demands have been met. 5% VAT on gold sales, high tax on imports, etc. are all creating serious obstacles to the development of this industry,” he said.