Contrary to expectations of cut in gold import duty, the bullion received a big blow from the Budget with levy of one per cent excise duty on gold and diamond jewellery without input credit or 12.5 per cent excise with input credit.

The move will push up jewellery prices in India when global prices of the yellow metal are softening. The import duty on semi-pure gold dore bars has been increased to 8.75 per cent from 8 per cent.

Saurabh Gadgil, Vice-President, Indian Bullion and Jewellers Association and Managing Director, PNG Jewellers, said levy of excise duty is a retrograde step and its implementation is not practical with 90 per cent of jewellery manufactured by small and micro sector and karigars .

Praveenshankar Pandya, Chairman, GJEPC, said jewellery is largely produced by the small and medium enterprises and they are not equipped to follow the rigid compliance of excise norms.

The imposition of excise would severely impact jewellery production resulting in loss of employment.

While making gold jewellery buying an expensive affair, Finance Minister Arun Jaitley has made other forms of gold investments – Gold Monetisation Scheme and Gold Bond Scheme – more attractive by offering tax relief and capital gain indexation benefits for transfer of bonds.

Somasundaram PR, Managing Director, World Gold Council, said the excise duty levy is inconsistent with the main pillar of governance and ease of doing business on which the Budget was drawn. The duty will make jewellery buying more expensive and could lead to irregular business practices.

Additionally, he said increase in gold dore duty could hinder growth of the nascent domestic gold refining industry.