Budget 2019

Buying jewellery will be harder on your pocket

Sangeetha Chengappa Bengaluru | Updated on January 27, 2018 Published on February 29, 2016

A woman is reflected in a mirror as she tries on a necklace at a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Kolkata, India, in this April 21, 2015 file photo. India is planning to auction at least three gold mines in 2016, a top government official said, opening up the sector to private firms for the first time ever in a bid to slash imports of the metal that cost the government $36 billion last year. REUTERS/Rupak De Chowdhuri/Files   -  REUTERS

1% excise duty regressive, says industry

Vani Venkatesh, a healthcare professional who buys gold jewellery worth ₹1.5-2.5 lakh every year most certainly would not like to pay an extra 1 per cent for gold purchases. “I painstakingly save up to buy jewellery and would rather buy BIS-hallmarked jewellery from a jeweller who lets me pay in cash without a bill. ” However, homemaker Padmaja Kumar, who buys over ₹3 lakh worth of jewellery on Akshaya Tritiya, Varamahalakshmi Pooja and Dhanteras every year says she will continue the tradition.

‘Hits organised sector’

The Finance Minister’s fresh levy of 1 per cent excise duty on articles of jewellery for all jewellery businesses with an annual turnover of ₹6 crore and above, practically bringing 99 per cent of the businesses under the tax net, is a very retrograde step, says the industry.

PAN card rule

Organised jewellery businesses will take a hit with the fresh levy, says C Vinod Hayagriv, Managing Director, C Krishniah Chetty & Sons, past chairman of All India Gems & Jewellery Trade Federation.

Stating that his team is assessing the negative impact, he said: “Unorganised jewellers and goldsmiths will thrive as they accept cash from customers without making a bill while our business will fall as we will pass on the levy to customers. Moreover, tax collected at source for jewellery purchases above ₹2 lakh requires customers to declare their PAN card number, while previously it was for transactions above ₹5 lakh. How many households own a PAN card, and why should the government single out the gem & jewellery industry for this rule? They must mandate PAN card requirement for even a cup of coffee and make it a level playing field for all sectors and industries.”

In 2012, then finance minister Pranab Mukherjee had levied this duty on jewellery which was revoked after the industry protested and shut down for 21 days, recalls Tanya Rastogi, who is on the Board of Directors of India Bullion and Jewellers Association and is Director, Lala Jugal Kishore Jewellers.

Published on February 29, 2016
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