Jaitley indicates new jewellery levy to stay

Says preparing for GST; FinMin says no logical case for a rollback, even as traders continue stir

Finance Minister Arun Jaitley indicated on Monday that the government would not withdraw its Budget announcement of one per cent excise duty on gold jewellery. He said this was to prepare for the national goods and services tax (GST).

Jaitley was replying to the discussion on Union Budget in the Lok Sabha. The Appropriation Bill was passed by the House. “The one per cent excise duty is in preparation of GST, which we hope will become a reality soon. We are also providing exemptions,” Jaitley said.

In his Budget speech on February 29, he’d proposed an excise duty of one per cent without input tax credit or 12.5 per cent with this credit on articles of jewellery, with a higher exemption and eligibility limit of Rs 6 crore and Rs 12 crore in yearly turnover, respectively.

This led to a nationwide strike by the trade, 13 days old on Monday. India Bullion and Jewellers Association says this will go on till the duty is withdrawn. An Association official said they’d meet in the next few days to decide further action.

Jaitley’s indication on Monday was backed by finance ministry officials. The tax department has tried to assure the trade of not harassing it over the issue, via search and seizures. Central Board of Excise and Customs Chairman Najib Shah has written to field formations in this regard.

“How can one per cent excise duty be an issue?. Under GST, none of these commodities are going to be out. It is a Rs 1.5 lakh crore industry and you have a problem with a one per cent tax,” said a senior government official, who did not wish to be named. As against an excise exemption limit of Rs 1.5 crore a year for normal small scale industry, the jewellery sector has an exemption limit of Rs 6 crore.

During his reply, Jaitley also took a dig at the opposition, especially at Congress Vice-President Rahul Gandhi. While talking about black money, Jaitley referred to the ‘Fair and Lovely’ comment made by Gandhi in the House last week.

Without naming the latter, the finance minister said, “I have no problem with this phrase but it is politically incorrect. It shows a racist mindset that what is not fair is not lovely... World over, people frown on use of such a phrase. In any case, I will pass it off as ignorance.” Gandhi had used the phrase while alleging the government had brought the black money disclosure scheme in the Budget to enable conversion of black money into white. Jaitley said the government’s proposal was not an amnesty scheme, a Voluntary Disclosure of Income Scheme or any concession, unlike schemes brought by earlier administrations.

On the high level of non-performing assets in the banking system, Jaitley said not a rupee had been written off; bad loans had been reclassified.