ISLAMABAD: The government is planning to announce an incentive package for the importers and exporters of gems and jewellers in budget (2025-26).
Sources told media that the Federal Board of Revenue (FBR), Ministry of Commerce and Trade Development Authority of Pakistan (TDAP) are finalizing budget proposals for next fiscal year.
One of the key proposals revealed since the price of gold is volatile and is expected to remain so, a more viable option to avoid revision from time to time is to fix these norms in absolute rupee terms rather than the current percentage basis. It is, therefore, suggested that the value addition norms should be fixed at Rs.100/gm for Gold bangles, Rs.150/gm for other plain jewellery and Rs. 200/gm for studded or embedded jewellery.
The proposals revealed that under the Entrustment Scheme, TDAP shall ensure that the contract signed by the buyer is notarized from the relevant foreign country’s legal authorities, duly attested by the relevant Pakistani Missions abroad.
Notarization of the contract is cumbersome and lengthy process and buyers are reluctant to undergo such process.
The attestation of already notarized contracts by the Pakistan Missions again is also cumbersome process, time consuming and exerts extra financial burden on exporter.
TDAP shall ensure that the contract signed by the supplier is verified through direct receipt of copy of Contract through e-mail. The original contract may be shown by the supplier when he arrives with the consignment.
It is suggested that exporter may be allowed to bring 100% of gold content either in form of gold (or) in the form of foreign exchange. The exporters are willing to bring 100% foreign exchange if WHT and expert development surcharge (EDS) is deducted only on the value addition. The value of precious metals and wastage shall be exempted from deduction of any tax.
Exemption of taxes on value of precious metals and wastage will save the exporter from incurring more expenses than the profit earned, thus making the business ventures feasible.
The sources stated that the gold and other precious metals are very high valued items and imposition of 18% GST on import of gold will increase the production cost of Jewellery to be exported, which will make the business ventures non-feasible and impractical, as only 3% to 5% profit is charged by the exporters on the value of Gold from the customers, for value addition.
At present exemption entry at S. No: 178 in Sixth Schedule, Table 1 of Sales Tax Act reads “Import of gold under entrustment scheme under SRO 760(I)/2013” which should be amended as “Import of gold and unsold jewellery imported under SRO760(I)/2013”, so that all schemes of SRO 760(I)/2013 may be exempted from 18% GST.
Another budget proposal stated that the jewellery sector pays 18% Sales Tax on gold while purchasing it for making jewellery and subsequently selling it in local market; whereas only 3% GST is allowed to be charged from local customers on sale of jewellery. This makes business ventures impractical and non-feasible as the GST rates for purchasing gold and selling jewellery are not conversant with each other and Gold being very high valued metal has made this arrangement impractical.
In first preference S No: 37 Sales Tax Act 6th Schedule Table-1 may be reinstated or reduced rate of sales tax @ 1% for purchasing gold locally, may be prescribed in Fifth Schedule of Sales Tax Act.
ISLAMABAD: The government is planning to announce an incentive package for the importers and exporters of gems and jewellers in budget (2025-26).
Sources told media that the Federal Board of Revenue (FBR), Ministry of Commerce and Trade Development Authority of Pakistan (TDAP) are finalizing budget proposals for next fiscal year.
One of the key proposals revealed since the price of gold is volatile and is expected to remain so, a more viable option to avoid revision from time to time is to fix these norms in absolute rupee terms rather than the current percentage basis. It is, therefore, suggested that the value addition norms should be fixed at Rs.100/gm for Gold bangles, Rs.150/gm for other plain jewellery and Rs. 200/gm for studded or embedded jewellery.
The proposals revealed that under the Entrustment Scheme, TDAP shall ensure that the contract signed by the buyer is notarized from the relevant foreign country’s legal authorities, duly attested by the relevant Pakistani Missions abroad.
Notarization of the contract is cumbersome and lengthy process and buyers are reluctant to undergo such process.
The attestation of already notarized contracts by the Pakistan Missions again is also cumbersome process, time consuming and exerts extra financial burden on exporter.
TDAP shall ensure that the contract signed by the supplier is verified through direct receipt of copy of Contract through e-mail. The original contract may be shown by the supplier when he arrives with the consignment.
It is suggested that exporter may be allowed to bring 100% of gold content either in form of gold (or) in the form of foreign exchange. The exporters are willing to bring 100% foreign exchange if WHT and expert development surcharge (EDS) is deducted only on the value addition. The value of precious metals and wastage shall be exempted from deduction of any tax.
Exemption of taxes on value of precious metals and wastage will save the exporter from incurring more expenses than the profit earned, thus making the business ventures feasible.
The sources stated that the gold and other precious metals are very high valued items and imposition of 18% GST on import of gold will increase the production cost of Jewellery to be exported, which will make the business ventures non-feasible and impractical, as only 3% to 5% profit is charged by the exporters on the value of Gold from the customers, for value addition.
At present exemption entry at S. No: 178 in Sixth Schedule, Table 1 of Sales Tax Act reads “Import of gold under entrustment scheme under SRO 760(I)/2013” which should be amended as “Import of gold and unsold jewellery imported under SRO760(I)/2013”, so that all schemes of SRO 760(I)/2013 may be exempted from 18% GST.
Another budget proposal stated that the jewellery sector pays 18% Sales Tax on gold while purchasing it for making jewellery and subsequently selling it in local market; whereas only 3% GST is allowed to be charged from local customers on sale of jewellery. This makes business ventures impractical and non-feasible as the GST rates for purchasing gold and selling jewellery are not conversant with each other and Gold being very high valued metal has made this arrangement impractical.
In first preference S No: 37 Sales Tax Act 6th Schedule Table-1 may be reinstated or reduced rate of sales tax @ 1% for purchasing gold locally, may be prescribed in Fifth Schedule of Sales Tax Act.
American Dollar Exchange Rate