Pakistan is preparing to revise its value-addition mechanism for jewellery exports following consultations with industry stakeholders.
The Ministry of Commerce will seek approval from the federal cabinet for the proposed changes.
The move follows concerns that existing rules have become costly due to the sharp rise in international Gold prices. Commerce Minister Jam Kamal Khan has directed officials to prepare a summary for the cabinet.
Joint Secretary Commerce Waqas Azeem has been tasked with preparing and moving the proposal.
Existing Gold Export System Faces Industry Concerns
Pakistan currently calculates value addition under SRO 760(I)/2013.
The existing mechanism links required value addition with international Gold prices.
Jewellery exporters argue that this percentage-based system has become increasingly expensive. Industry representative Arif Patel highlighted the sharp increase in international prices since the rules were introduced.
According to the provided figures, prices stood near $1,380 per ounce in 2013. They have since climbed to around $5,100 per ounce.
The industry therefore wants a fixed per-gram mechanism instead of the current percentage-based calculation.
Jewellery Exporters Propose Fixed Rates
Industry stakeholders proposed three separate value-addition rates during consultations. They suggested a $2 per gram rate for plain gold jewellery.
A $3 per gram rate was proposed for plain gold chains.
For studded gold jewellery, stakeholders recommended a $5 per gram value-addition rate.
The State Bank of Pakistan supported the possibility of revising the existing mechanism. SBP said it had no objection to either percentage-based or per-gram calculations.
However, the Ministry of Industries and Production supported retaining a percentage-based system.
It proposed lowering the applicable limit and bringing the mechanism closer to regional practices.
Sales Tax Issue Remains Unresolved
The jewellery industry also raised concerns about sales tax on imported precious metals. Imports under the Entrustment Scheme currently receive a sales tax exemption.
However, the Self Consignment Scheme and unsold jewellery are subject to an 18% sales tax. Stakeholders want this exemption extended to imports covered by SRO 760(I)/2013.
The Commerce Ministry said the Federal Board of Revenue had agreed to address the issue. The proposed change was expected to be considered in the 2026-27 federal budget.
However, the government did not introduce the requested amendment.
Industry Wants Export Proceeds in Gold
Another issue involves rules for receiving proceeds from jewellery exports.
Current regulations require at least 50% of export proceeds through normal banking channels in foreign currency. The remaining 50% can be received through foreign exchange or precious metals.
Exporters have requested permission to receive up to 100% of their proceeds in Gold.
The industry cited changing international prices, exchange rates, and differences between local and global markets. However, the State Bank rejected this proposal.
SBP wants exporters to continue following the existing arrangement and remit required export proceeds in dollars. The Commerce Ministry will now proceed with its cabinet summary on the revised value-addition mechanism.
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However, issues involving sales tax and the payment of export proceeds remain unresolved.
