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Vat woes: Gold loses lustre in Punjab
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 17
The Punjab government’s decision making it compulsory for all gold traders to declare the quantity of gold being brought in the state, has curtailed the inflow of gold in Punjab. Winter being the main season for gold sales, especially in the wake of the marriage season and with NRIs flocking home, the sales have been hit hard.

Gold traders in Punjab said ever since the government made it compulsory to declare all gold being brought in or taken out of the state, under Section 51, VAT, at the information collection centres (ICCs), the sales have been hit hard. Because of security concerns, traders are not ready to declare their gold at the 32 ICCs in the state. So, they are not ready to get the yellow metal in the state and supply is restricted.

Devinder Khanna, secretary, Punjab Sarafa Association, said as a result of their compulsory declaration, the availability is down by over 40 per cent. “Punjab is the only state to have this regulation on gold trade, and traders are restricting their supply here for fear of being looted after they declare the gold at the ICCs, and while they reach their destination. As a result, new designs of jewellery are not available to customers here, who are now thronging to jewellers in Delhi and Mumbai,” he rued.

Amritsar is one of the main manufacturing hubs for gold jewellery in the region and traders say that their traditional jewellery suppliers are now shifting towards the other manufacturing hubs of Delhi, Mumbai, Rajkot and Kolkata.

If a trader fail to declare the gold, a fine up to 50 per cent of the value of metal seized, and an additional surcharge of 4 per cent is imposed on the defaulter.

It may be noted that the bullion worth Rs 1200 crore reached the markets of Punjab last year. This means that gold worth Rs 3.20 crore was sold daily. But with the new regulations and the all- time high gold prices, the sales have been hit. Anand Sekri, a leading Ludhiana-based jeweller and president of the Ludhiana jewellers association, said jewellery sales, especially to the NRIs, was also hit because of the high prices ( Rs 11,750 per 10 gm today). “Gold consumption has come down drastically over the past two years. Even the NRIs are only getting their old gold converted into new designs of jewellery. Though this segment of customers and the marriage season led to a 40 per cent increase in sales at this time of the year, this year we have seen no such surge in business,” he added.

Interestingly, while the sales are down, the future trading in gold has picked- up over the past couple of years. Hemant Sood, channel partner of Angel Broking at Ludhiana, said with a global decline in rate of interests on bank deposits, a new interest has emerged in gold investment, which has led to a sharp increase in prices of gold. “People are even selling exchanging their forex and investing in futures trading of the yellow metal,” he said.



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