New Delhi, Aug 25 (KNN) The government think-tank Niti Aayog has suggested the government to bring down import duty on gold from the existing level of 10 percent and also slash the Goods and Service Tax (GST) rate on the precious metal from the current 3 percent.

In its latest report, the committee headed by Niti Aayog Principal Advisor Ratan P Watal said “reduction in the customs duty in the past has been argued to support tax compliance coupled with a significant reduction in the quantum of gold smuggled into India.”

In this context, it is important to reduce the basic customs duty on gold to as low as possible to create a tax compliant system within the sector, Watal added.

The committee also suggested exemption of 3 percent Integrated Goods and Service Tax to be paid by exporter online with custom duty with a provision of bank guarantee.

This exemption, it said, should also be extended to the supply of gold by foreign buyer.

Besides, the committee said there should be reduction of GST on gold from 3 percent to appropriate levels.

The think tank said that the threshold for exemption under GST, which at present is Rs 20 lakh, should be revised on the basis of value-addition, which can be determined by using average ratio of value added to value of sales for the sector concerned.

Also, the GST rate for repair service of jewellery should be reduced from 18 percent to 3 percent, Niti Aayog advised.

The committee has recommended scrapping of commodity transaction tax on gold derivatives and provision for capital gains tax exemption for gold related financial instruments.

The committee said the finance ministry must review and revamp the gold monetization scheme and sovereign gold bond scheme.

It said that the banks should be encouraged to set up more branches to accept gold deposits under the gold monetization scheme, allow deposits as low as one gram, and multiples thereof, and exempt the transfer of gold collected under the scheme from the purview of the GST.

The committee, which was constituted to recommend measures to transform India’s gold market, suggested the introduction of ‘Gold Savings Account’ that will accept rupees and credit grams of gold, with passbook facility.

It also proposed to set up ‘The Gold Board of India’ and bullion exchanges under the Ministry of Finance as a single-window, one-stop interface that will be assigned with the responsibility to formulate policies.

Gold as a foreign exchange asset would continue to be professionally managed by the regulator RBI, it said.