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Gold trade cites adverse Budget, threatens to move out of Kerala

Our Bureau Thiruvananthapuram | Updated on January 28, 2014 Published on January 28, 2014

‘Perfectly legal’ businesses are unfairly singled out, they say

Jewellers in Kerala say the Budget for 2014-15 has rendered their very existence at stake, prompting a renewed threat to leave the State for good and set up businesses elsewhere.

The Budget merely perpetuates a cruel irony in which ‘perfectly legal’ businesses are unfairly singled out for heavier taxation, says Kerala Jewellers Federation.

“We are being made to pay for being honest,” office-bearers of the Federation told newspersons here on Tuesday.

Repeated pleas to the government to revise VAT lower from an unconscionably high of five per cent have fallen on deaf ears, they said.

Neighbouring States are taxing gold ornaments at only one per cent.

This ensures that customers pay up tax and traders account it without fuss or rancour.

If the State government wants traders and customers peacefully co-exist, tax should be brought down to one per cent forthwith.

Unbilled sales leave customer the most hurt. Proper bill is necessary to claim insurance, for ensuring legal protection, and for settling arbitration with respect to purity of gold.

Billing of sales

Given this, the government must take immediate steps to rule out sale of even a gram without bill.

A sustained campaign on this count should be launched in public interest.

According to the Federation, the compounding should be made scientific by scrapping the three-slab system into two on either side of a median turnover of ₹ 1 crore.

It traced the travails originally to a provision in the 2011-12 Budget that introduced a surprise 1.25 per cent tax on previous year’s turnover, over and above compounding tax.

Till that year, traders were required to compound at 125 per cent of the tax paid out in the previous year.

Of the two, the newly introduced provision in 2011-12 required the trader to pay up whichever was the highest.

This went against basic principles of taxation. The impact was decisive and immediate; gold sales plummeted 40 to 50 per cent in 2012-13 and 2013-14. Alongside, gold prices came down by 20 per cent as recession set in.

But tax liability went up by 25 per cent, forcing traders to pay up mostly from their own pocket.

It is in this background that the Budget for 2014-15 comes in, paying least heed either to trader sentiments or changes sought by them with respect to taxation regime.

Those present at the press conference were TS Kalyana Raman, Chairman, Kalyan Group; MP Ahammed, Chairman, Malabar Gold Group; PV Jose, President, Kerala Jewellery Manufacturers’ Association; and Babu M. Philip, Director, Josco Group.

Published on January 28, 2014
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