The All India Gems and Jewellery Trade Federation (GJF) has written to the Union finance ministry to amend certain provisions of the direct tax code. The federation is of the view that the implementation of the code will lead to the closure of the jewellery industry within ten business cycles.
Bachraj Bamalwa, vice chairman, GJF, said that the three key provisions in the code, pertaining to search and seizure, tax on gross assets and TDS on all payments, were detrimental to the growth of the gems and jewellery industry. According to the new tax code, there will be a seizure of the entire stock in trade when there is any difference found during raids. “GJF also objects to 2 per cent tax on gross assets since the industry operates on small margins with high inventory levels. In this case, a company earning 2 per cent net profit requires to pay the same tax as a company earning 8 per cent profit. GJF also objects to the deduction of tax at 10 per cent on all payments for gold, diamond and jewellery, as it would block working capital for the industry which is facing a huge liquidity crunch,” said Bamalwa.
According to the federation, the seizure of stock-in-trade jewellery, bullion and precious stones will create difficulties for the assesses of the gems and jewellery industry, as it will result into cessation of their manufacturing operations.
