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India Removes Excise Duty on Jewelry

Industry Leaders Rejoice

May 7, 2012 7:36 AM   By Dilipp S Nag
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RAPAPORT... The Indian government has withdrawn the excise duty on branded jewelry and the proposed duty ‎on unbranded jewelry much to the relief of the industry and consumers.‎

‎“The outpouring of sentiment both within and outside the house [of Parliament] indicates that ‎we are not ready for it,” Pranab Mukherjee, the country's Finance Minister said in the Lok Sabha, ‎India’s lower house of Parliament, on Monday. “As such, the government has decided to ‎withdraw the levy on all precious metal jewelry, branded or unbranded, with effect from ‎March 17, 2012.”‎

Earlier in March, Mukherjee proposed in his federal budget speech to impose a 1 percent ‎excise duty --a type of tax charged on goods produced locally-- on unbranded jewelry, among ‎other measures. A 1 percent duty on branded jewelry was already in place. Indian bullion ‎traders and jewelry retailers responded by declaring a strike, which ended after three weeks ‎when Mukherjee agreed to reconsider the proposed tax.‎

Mukherjee also increased the limit on the tax collected at the source (TCS) for buying jewelry in ‎cash to $9,350 (INR 500,000) from the earlier threshold of $3,740 (INR 200,000). However, the ‎minister noted that the threshold limit for TCS on cash purchase of bullion, excluding coins or ‎other articles below 10 grams, shall be retained at INR 200,000. ‎

The announcement was well received by local trade organizations.‎

‎“This is good news for the industry,” said Bachhraj Bamalwa, the chairman of the All India Gems ‎and Jewellery Trade Federation (GJF). “The industry will be able to work smoothly. Our ‎workers and goldsmiths are happy that there will be no hassles now," ‎

Praveen Khandelwal, the secretary-general of the Confederation of All India Traders (CAIT) and ‎Vimal Goel, the president of the Delhi Bullion & Jewellers Association (DBJA) said in a joint ‎statement that the move is a step forward to mitigate genuine problems of the thousands of ‎jewelry traders in the country and also the millions of other people who are dependent upon ‎the jewelry trade for their livelihood.‎

“The rollback provides the right financial atmosphere for the industry to grow and build the manufacturing sector in India,” said Rajiv Jain, chairman of the Gem & Jewellery Export Promotion Council (GJEPC).

Mukherjee, however, didn't mention anything about the customs duty on gold, which he ‎previously proposed should double to 4 percent. He had earlier ruled out any reduction in the ‎import duty on gold as the government seeks to reduce imports due to its current account ‎deficit. ‎

India’s gold imports have increased from $4.1 billion in the country's fiscal year that ended in March 2002 to $33.8 billion in fiscal year 2011. The ‎increase was due to the significant price increases for the precious metal coupled ‎with rising demand in the country. The Associated Chambers of Commerce and Industry of ‎India (ASSOCHAM) has warned that these levels of imports are a huge burden on the balance of ‎payments and accentuate the current account deficit.‎
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Tags: Branded jewelry, budget, Dilipp S Nag, Excise duty, GJF, gold, Import Tax, India, Jewelry, Pranab Mukherjee, Rapaport, Strike, Unbranded Jewelry
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good disgen
May 8, 2012 1:57AM    By laxman rabari
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