In a bid to bring its tax structure at par with competing states and secure its revenues, the Maharashtra government is mulling to waive the stamp duty on the import of gold and silver in the state.
While Maharashtra levies a 0.1 per cent stamp duty on gold imported by air, sources said that the import of gold has been shifting to other states, as they don’t impose stamp duty. As this arbitrage resulted in decline of gold imports within the state, sources said that the government has been losing hundreds of crores in goods and services tax (GST) on import of gold. They further said that the waiver of stamp duty on gold could increase state revenue.
On Thursday, the government constituted a committee to conduct a comprehensive study of the stamp duty, comparing it with that of other states, its impact on the state revenue and the industry if stamp duty were to be waived and also to recommend a road map. The committee will be headed by Manoj Saunik, Additional Chief Secretary (Finance), and will submit its report within a month.
At present, Maharashtra levies 0.10 per cent stamp duty on gold imported by air.
Officials from the state finance department said that the committee has been constituted following demand by the bullion and jewellers industry. “The stamp duty on the import of gold is not there in places such as Delhi, Chennai and others. So, the traders are importing gold from these places as they have lower taxations. As a result, the government is losing the revenue that it could have received otherwise,” said an official.
The India Bullion and Jewellers Association, in its representation to the state government last May, had said that due to levying of stamp duty of gold, the import is getting shifted to the neighbouring state and Maharashtra is losing revenue. India imports nearly 800 tonne of gold, which is equivalent to almost Rs 4 lakh crore, every year by air.
“On import of Rs 4 lakh crore of gold, the GST is levied at 3 per cent, which is equivalent of Rs 12,000 crore. The IGST and SGST revenue due to this comes to Rs 6,000 crore each. Since Maharashtra levies stamp duty of 0.10 per cent, the state GST revenue is lost to the extent of Rs 6000 crores,” stated the association.
It further said that collection of just Rs 400 crore by way of stamp duty is resulting in a huge loss to the state not only in terms of GST but also in terms of custom revenue and employment opportunities. “The government should remove the stamp duty on the import of gold that will enable the state government to earn the huge revenue in form of GST,” it added.
Between the quarters of December 2019 and February 2020 and July 2020 and September 2020, Delhi imported gold worth Rs 36,281 crore while Chennai imported it worth Rs 7,804 crore. Mumbai imported gold only worth Rs 1,342 crore.