The jewellers’ agitation against various taxes proposed by finance minister Pranab Mukherjee in the Union Budget 2012-13 has hit gold imports badly.
According to Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation (GJF), trading in gold has come to a standstill since the various levies announced in the Budget on March 16. As a consequence, gold imports into India are estimated to have declined 73 per cent to a mere 20 tonnes between March 17 and April 4, as compared to around 75 tonnes in the corresponding period last year.
The decline assumes significance as March-April is considered the peak season for jewellers due to wedding sales across the country. The wedding season constitutes around 30 per cent of total annual sales. Traders fear acute shortage of gold to meet wedding season demand when they re-open shops.
Jewellers across the country have shut since March 17. According to Bamalwa, the industry has suffered business loss of around Rs 20,000 crore, while the government’s tax collection has taken a hit by Rs 700 crore because of the closure. Fresh imports have halted completely and execution of old orders must be happening only with banks, he added.
The jewellery associations across the country have called for a massive rally on Saturday in Mumbai and on Wednesday in Ramlila Maidan, New Delhi.
In the Budget, the government proposed a 100 per cent increase in customs duty on gold imports from the existing two per cent to four per cent. Apart from that, tax collection at source (TCS) was also levied, under which a consumer buying jewellery worth Rs 200,000 and above would have to pay one per cent of additional tax. One per cent excise duty was also levied on all jewellery items, which the finance minister proposed to be collected on 30 per cent of jewellers’ self assessment annual turnover. The total excise duty, therefore, works out to be 0.3 per cent, raising the government’s additional collection by Rs 150-200 crore.
“It is not the duty per se we are opposing. Inspector Raj would come up again through the excise levy under which all jewellers selling over 60g of gold everyday will be covered. Now, all small and medium-size jewellers would come under this excise ambit. Hence, we are protesting the government’s move,” said Ashok Minawala, an industry veteran and ex-chairman of GJF.
The finance minister has convened a meeting with the representatives of jewellers associations across the country tomorrow to take a final decision in this regard.
