Jewellery sector contributes to black money: CBEC chief

Despite the ongoing jewellers' strike to protest against reimposition of 1 per cent excise duty on gold and diamond jewellery, CBEC today said the sector contributes to generation of black money and needs to be brought under the tax ambit.
"We have brought jewellery (sector) into the tax net. This is the levy which we had attempted two years ago and withdrawn... This is the sector which you will agree with me needs to be brought into tax needs," Chairman of the Central Board of Excise and Customs (CBEC), Najib Shah today said at an event organised by industry body Assocham.

"This is a sector which lends itself to generation of unaccounted wealth."
Finance Minister Arun Jaitley in the Budget for 2016-17 had proposed 1 per cent excise duty on jewellery without input credit or 12.5 per cent with input tax credit on jewellery excluding silver other than studded with diamonds and some other precious stones.
Jewellers are on a three-day pan-India strike to protest against the proposed re-introduction of 1 per cent excise duty on gold and diamond jewellery and mandatory quoting of PAN by consumers for transaction of Rs 2 lakh and above.
Shah noted: "... Manufacturing sector contributes 17 per cent of GDP. We have a huge chunk of industry which is out of the tax net."

The CBEC chairman said the revenue department will take a hit of Rs 1,000 crore due to the change in CENVAT credit rules.

"But we thought it is essential because the cost of litigation for you and me are much more than revenue which otherwise we have got," he said.
Noting that the government has increased some duties, Shah said it's done so to create a level-playing field for Indian industries as was the case in defence.
He urged industries to stop demanding exemptions to avail of goods and services tax (GST).
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Shah said Budget 2016-17 aims to bring various sectors under the tax net in an easy manner.

Talking about CENVAT credit rules, he said that more than 10-12 per cent of the litigations were because of two specific rules -- Rule 6 and Rule 7, that have now been completely revamped.
"We have tried to simplify them to the maximum extent possible," Shah said.
Shah said that all these simplified processes will add to ease of doing business and reduce transaction costs.
"The focus right through the Budget has been on simplification, on ensuring that the taxpayer gets better value for money, gets better services from us and has lesser interaction with us," he noted.
On the customs side, Shah said that deferment of payment of duty had been permitted.

"There are sections which have been amended in the Customs Act which permits removal of goods without payment of duty. The rules and details will be finalised in the course of next few weeks.
"Basically, we want to club this along with the concept of an accredited client, a scheme which we already have," the CBEC chairman said.
Shah said that because the customs are at the point of entry and exit, the department tends to get all the blame for reasons like the importer not filing bill of entry, wanting to take time to pay duty or not producing goods for examination and assessment.

On the issue of increasing the time limit for normal period of adjudication, he said, "Our analysis showed us that one year was too little for us simply because balance sheets for the financial year are invariably filed by the September 30 of the following year."
"So by the time the audit gets done and department gets to know something which we have to collect or not collect, the one year period gets over. To cover that, the departmental officers are invariably going in for the extended period of five years," he said.
Shah said that CBEC was trying to simplify the entire process of complying with tax laws.

"It is an on-going process, we are still finalising a lot of other things which we will be releasing, we have dramatically simplified SVB (Special Valuation Branch) processes," he said.