Thrissur, Kerala – Malayali jewellery businesses are currently grappling with heightened regulatory pressure, described by some as a "Licence Raj," following a series of extensive Goods and Services Tax (GST) raids that have uncovered significant sales suppression and seized over 100 kilograms of unaccounted gold. These operations, primarily centered in Thrissur, a major gold manufacturing hub, have sparked strong reactions from industry associations.
The Kerala GST department conducted operations such as 'Arkenstone' and 'Torre del Oro,' targeting numerous jewellery establishments and residences. In one such two-day operation that commenced in late August, officials seized 36 kilograms of unaccounted gold and unearthed sales suppression exceeding ₹100 crore, recovering over ₹2 crore in initial tax and penalties. A similar crackdown in October 2024, involving 700 officials, resulted in the seizure of 104-108 kg of unaccounted gold from 78 units.
These stringent actions have drawn sharp criticism from the Kerala Gold and Silver Merchants Association (AKGSMA). The association claimed the raids were an attempt to tarnish the reputation of legitimate traders, arguing that the seized amount was minimal compared to the sector's annual turnover of over ₹1 lakh crore. S. Abdul Nasar, the association's state treasurer, questioned the methods, stating, "The authorities should focus on raiding gold smugglers and parallel markets instead of targeting firms that comply with GST regulations and file returns."
The industry has also highlighted broader regulatory challenges, including high import duties and the current GST structure. The India Bullion and Jewellers Association (IBJA) and the All India Gem & Jewellery Domestic Council (GJC) have expressed concerns that increased duties could fuel smuggling and impact demand. The sector has consistently called for tax rationalisation, regulatory clarity, and policy stability to foster growth and competitiveness.
The ongoing regulatory scrutiny underscores the government's push for greater transparency and compliance within India's vast gold market. While authorities emphasize the need to curb tax evasion, jewellery businesses in Kerala are advocating for a more balanced approach that considers the industry's unique dynamics and addresses the challenges posed by illicit trade.
