Kolkata, March 31 (IANS): With the government retaining high customs duty on gold imports in this year's budget, industry body Assocham on Tuesday said smuggling of the yellow metal in India is likely to shoot up and introduction of mandatory PAN declaration on high-value gold purchases will dampen the industry.

"In the absence of lower (import) duty, smuggling of the precious material would shoot up... The jewellery sector had been seeking a cut in the import duty, which will increase the supply of gold and also curb illegal imports," it said in a statement.

It also termed the quoting of the PAN (permanent account number) for every purchase of gold jewellery over Rs.1 lakh as "un-workable, especially in rural and semi-urban areas".

"There are genuine concerns among the domestic industry and the retailers about the PAN becoming a major irritant for the sale of the jewellery," the association said.

According to the association, while the intention to restrict the cash transaction was understandable, "the stakeholders felt that the move is difficult to adhere to as PAN card would not be available with everyone", especially "farmers residing in remote Indian villages".

It said that the duties on import of precious, semi-precious metals and diamonds in cut and polished shape need to be abolished and a simplification of the process for direct sourcing of roughs, introduction of turnover based income taxation system, and an exclusive and separate duty structure for natural and man-made diamonds needs to be adopted in the country.