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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 The Indian government has withdrawn the excise duty on branded jewelry and the proposed duty on unbranded jewelry much to the relief of the industry and consumers.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
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May 8, 2012 1:57AM
By laxman rabari
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Nicce t0 garve dimond and gold bissnes
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