India’s diamond industry could be impacted by cheaper imports of polished stones.
Dubai: While the Indian government retained its import duty on gold, that for cut and polished diamonds as well as gemstones have been slashed to 5 per cent from 7.5 per cent.
“Somehow this doesn’t add up – India’s gold and jewellery sector would have benefitted from any reduction in gold import duty costs, which stand at 10.5 per cent now,” said Abdul Salam K.P., Vice-Chairman at Malabar Gold & Diamonds.
“By lowering duty on cut diamonds, it could end up impacting India’s own thriving industry for cutting and polishing diamonds, with Gujarat and Mumbai being the key centres. Lowering import duty will make it difficult for these businesses because there could be heavy competition from cheap imports.”
“The impact of the proposed duty cut needs to be watched carefully by these legacy businesses”
“That there was no customs duty cut on gold imports is a disappointment, while the duty reduction on cut and polished diamonds will only help diamond manufacturers, not jewellery retailers as such. This Budget doesn’t have much for businesses across multiple sectors, with the focus dominated by agriculture and infrastructure”
Stocks gain, swoon and rise
For India’s stock markets, the day started off bright with strong gains, then there was the drop when it was felt that the India Finance Minister’s latest spending programme was not going to cut it. Thereafter, the Sensex is turning red hot, and is currently up 900 points.
“While it is good to see digitisation, energy conservation and development of infrastructure has taken a clear precedence, the allocation towards healthcare is not to the level we anticipated. Coming out of the shadows of the pandemic, it is most important to allocate at least 3% of the Budget to healthcare”
“I do have my concerns on the growth targets as businesses need investments. The private sector is struggling to deal with growth and therefore sector contribution could be minimal unless government investments kick in in a big way.”
“Many NRIs who had invested in cryptocurrency in India will have to pay 30 per cent on any profit-taking”
More time on taxes
While there is no change on the income tax slabs, the government has been lenient on one aspect. “Currently, taxpayers have until December 31 each year to revise the IT returns,” said Jitendra Gianchandani, Partner at the tax consultancy JCG. “The government has now allowed revision of tax returns of up to 2 years. At the same time, it may increase the chances of a tax defaulter purposely making drastic changes in their IT returns and which would defeat the good intentions of the scheme for genuine taxpayers. The IT should set up the guidelines to define what income to include under ‘forgot’.
“Though 25-50 per cent penalties will be levied on the revised returns for omissions and mistakes, it’s still the cheaper option to extend IT returns up to two years.”
Source: Gulf News