Tax officials harassing gold retailers, says Ahammed

Malabar Gold eyes Rs60,000 cr revenue, 750 stores in 5 years

KOCHI: Malabar Gold & Diamonds, which claims to have introduced buy-back guarantee and a thrust on quality into the state’s jewellery retailing, eyes a revenue target of Rs60,000 crore and presence in 20 countries through 750 showrooms in the next five years.

Talking to businessbenchmark.news, the chairman of Malabar Gold & Diamonds, Ahammed MP (seen in picture), said Malabar Gold has currently 3000 investors, and more and more investors are now queuing up to participate in the success story of Malabar Gold & Diamonds.

“We have created a unique structure for the investors to park their funds efficiently, and the early investors had reaped return on investments (ROI) to the tune of 30 to 40 per cent. Though our profit margins are around 2.25 per cent, we are confident the company would be able to jack it up to 3 per cent sooner rather than later,” Ahammed said.

Talking at the Dhanam Retail seminar in Kochi recently, Ahammed lashed out at the way the tax officials deal with the gold retailers under the pretext of records examinations at their business premises.

He said despite the fact that 70 to 80 per cent of the gold retail business in the state is controlled by unofficial trades that customarily evade tax at sales points and customs duty at the sourcing points, unfortunately the officials are more enthusiastic about rummaging at the legitimate business entities to ‘uncover’ tax evasion.

“On the one hand, the official retail traders in the organized sector are struggling to compete on pricing with their unofficial counterparts, who are at an advantage of not paying the 3 per cent GST or the 10 per cent import duty, and on the other, the tax officials badger us regularly under the garb of tax records verifications,” Ahammed said.

The operators at the unorganized sector never sell their products through shops, but rather they deliver the finished jewellery at customers’ houses during night in order to escape the vigilance of tax officials, and this illicit business is insidiously spreading all over Kerala.

Ahammed presented statistics on imports to drive his point home. It showed that import of gold has been accounted only for $22.90 billion during 2017-18, whereas the import bill of pearls, precious and semi-precious stones amounted to $34.66 billion – which is against the established knowledge that pearls and stones historically constitute only about 10 or 15 per cent of gold.

“This takes us to the fact that only a small portion – 20 or 25 per cent of the gold import into the country is through proper channel;” he argued.

Ahmed called upon the government to rationalize the duty structure in order to rid smuggling that is rampant in gold. High duties and high taxes would only prompt people to explore ways to avoid them. “We have come to a stage where many businessmen genuinely believe that without evading taxes or duties businesses are not sustainable,” Ahammed lamented.

Kerala has been lagging behind several major states on Ease-of-Doing- Business with the latest ranking at 21. The state has been worsening its position during the past three years.

 

 

 

 

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