Tuesday, April 03, 2012

Jewellers’ strike enters 17th day even as both sides continue to lose money
The FM should remove the hike in service tax in case of Jewellery Sector, the rest can be kept as it is--it is good that government has taken measures so that money does not get stuck in some dead investments like gold. The same money is now expected to flow in the Indian Capital Markets. The government should take similar measures to contain the flow of money (Both black and white) in the real estate sector, so that same finds its way into the equity markets. Also, this move is expected to bring in some sanity to the CAD. If a person can buy gold then he/she should be ready to pay duties too.....or else buy some other thing during marriage!! The government should not pay too much heed to the strike, except bringing in some rationalization in the service tax part---after some days, everything would get streamlined.I wonder what problems the jewelers have in passing the excess cost to the end customers??!! If I were FM, I would have increased it to 10%--is gold an essential commodity that it has to be subsidized? There should be some logic to any strike--I do support these kinds of ill-conceived and puerile movements, against any establishment. 

Measures announced in Budget 2012-13:
  •  The Budget has proposed an excise duty of 1% on unbranded precious jewellery. 1% duty on branded jewellery existed earlier.
  • Increase in basic customs duty on standard gold bars; gold coins of purity exceeding 99.5% and platinum from 2% to 4% and on non-standard gold from 5% to 10%. 
  • Excise duty on refined gold is being increased in the same proportion from 1.5% to 3%.
  • In order to prevent round-tripping, it is proposed to impose basic customs duty of 2% on cut and polished, coloured gemstones at par with diamonds.
  • The Budget also proposed to levy 1% of TDS for transactions valued at more than Rs.2 lakh. All such transactions must be backed by PAN details.
  • Service tax of 12.5% levied on non-branded gold and jewellery. Even artisans and craftsmen come under the ambit.
Jewellers across the country have suffered a business loss of around Rs.14,000 crore while the revenue loss for the government comes to about Rs.690 crore, due to the ongoing strike against the excise duty hike in Budget 2012-13.
The ongoing indefinite nationwide strike by jewellers, demanding roll back in the excise duty announced in the Union Budget, is proving to be a costly affair not for the jewellers, but also for the government. On Monday, the strike entered into its 17th day.
In a statement, the All India Jewellers Association (AIJA), said, “…with continuous nationwide strike of 17 days, there is an estimated loss of business worth Rs14,000 crore resulting into a loss of custom duty revenue of Rs.550 crores to the central government and about Rs.140 crore loss has been caused to state governments on account of VAT.”
According to the Association, the government has fetched only Rs.25 crore as tax from jewellers during the past 17 days. The Association has urged the government to act wisely and accept genuine demand of traders by rolling back the excise duty immediately.
“We do not mind paying taxes, but we will not pay any excise duty. What is the rationale behind (charging) it? The government will soon announce the Goods and Services Tax (GST), so there is no point in levying the excise duty and therefore we demand complete roll back of this (excise duty). Till then the strike will not be called off,” said Manish Jain, of Rajmal Lakhichand, one of the biggest jeweller in Maharashtra.
Sarafa bazaars (jewellery markets) in Delhi, Maharashtra, Gujarat, Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, West Bengal, Chhattisgarh, Tamil Nadu and in other states remained completely closed and no trading activities took place as markets wore deserted look, the AIJA said in the release.
To control the current account deficit (CAD) partly caused by the imports of gold and other precious metals in the first three quarters of this fiscal, the finance minister has proposed additional duties to limit the imports of gold and silver. Finance minister Pranab Mukherjee has proposed to increase import duty on gold to 4%, increase excise duty on branded and non-branded jewellery by 1%, 2% tax on cash sales of over Rs2 lakh, while removing the 1% excise duty on branded silver jewellery.
To protest against the hike, jewellers from across the country are on a strike since 17th March.
AIJA, in an earlier release said, “…the trade does not hesitate to collect and pay taxes in any other form like surcharge or cess but certainly not interested in becoming subject to one another department of excise. Already the trade is subject to numerous other taxes like custom duty, VAT, directly and several other taxes indirectly. Further, the traders are required to comply with other state and local self-government laws, rules and Acts.”
New body, courtesy: Money Life
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