THIRUVANANTHAPURAM: The largest fraternity of gold traders in the state, All Kerala Gold and Silver Merchants’ Association, has objected to the move to scrap the compounding tax system for gold saying it would benefit only a handful of big players and leave 5,000-odd small traders at the mercy of tax officials.
The proposed Gold Tax Bill seeks to abolish compounding tax and reduce VAT on gold from five to one percent.
“It is usual for the government to consult the Association before any major decision in the sector is taken. However, strangely our opinion was not so-ught while the new bill was prepared,” said M. Rammohan Kammath, the general secretary of the Association. The timing of the Bill is also viewed with suspicion by the Association.
“The government has been in power for more than four years. Why are they trying to push the Bill through at this moment, at a time when the GST Bill is on the anvil,” said advocate Abdul Nazar, the treasurer of the organisation.
The Association, too, feels that the new tax measures will reduce revenue from gold. This, the Association members said, will lead to official harassment.
Traders who had adopted the compounding system, by paying 150 percent of the highest tax paid in the last three years of operations, were left untouched by raids.
“But now when revenues come down, they will start raiding us. In our trade, we are harassed for even the smallest technical glitch,” Mr Kammath said.
As for the big players, scrapping the compounding system will be a big gain. Tax officials said that big traders like Kalyan or Malabar or Josco now pay three per cent of their turnover as compounding tax annually.
“Now with compounding on the way out and VAT on gold reduced to one from five percent, the gold giants will prosper,” the official said.
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