Jewellers body GJF today opposed the government's decision to make PAN mandatory on over Rs 2 lakh of cash transaction, saying the move would affect badly their business and sought the limit to be hiked to Rs 10 lakh.
Imposition of PAN will affect jewellery sales, especially in rural India, and also lead to growth in the unorganised market as well as sharp jump in the gold smuggling to about 300 tonne from present 100 tonne, the association said, while calling the move as "impractical" to curb black money.
Even in 10 metro cities, the sales are likely to drop by 50 per cent, the body added.
It demanded the gold import duty should be brought down to 2 per cent from the current 10 per cent, if not in one go then gradually.
"Jewellery industry will collapse if quoting PAN number is made mandatory from January 1 on cash transactions of more than Rs 2 lakh," All India Gems and Jewellery Trade Federation (GJF) Chairman G V Sreedhar told reporters here.
He feared the share of organised jewellery market, which is currently 20-25 per cent, would drop substantially with the imposition of PAN card requirement as sales would be diverted to unorganised and grey markets.
Sreedhar said it would be difficult to implement the PAN requirement in the rural market, which constitutes 70 per cent of the total jewellery sales.
He mentioned the number of PAN cards issued so far in the country are also very less.
GJF past Chairman Ashok Minawala said the PAN requirement would "break the backbone" of the jewellery industry, on which about one crore artisans are directly dependent. Total six crore people, directly and indirectly, are connected to this industry.
The limit should be raised to Rs 10 lakh like in the case of purchase of immovable property, he said.
"The requirement of producing PAN cards is an indirect way of curtailing the growth of this industry. This will directly affect the manufacturing as business activity will drop down and parallel business opportunities will start blooming in our industry," Minawala said.
The organised sector would 'die' and unorganised market would 'thrive', he added.
"We do not doubt the government's intention to combat black money, but can such measures actually stop generation of black money. This is not a practical solution and will discriminate the 70 per cent of the rural buyers of jewellery as they are not under tax net and do not have Pan cards," Minawala said.
Asked about the budget wish-list, GJF said it wants reduction in import duty on gold from current 10 per cent.
"A gradual decrease is also acceptable and fair enough," Minawala said.
On Gold Monetisation Scheme, GJF member D D Karel said the scheme has not been designed properly. "Jewellers involvment should be there and they should be made collection agent".
He said the person deposition over 500 gram of gold under this scheme should not be asked about the source.
The government yesterday constituted a panel under former
Chief Economic Advisor Ashok Lahri to look into the demand of jewellers who are protesting against imposition of 1 per cent excise duty on non-silver jewellery items.
The panel, which has been asked to submit its report in 60 days, will look into issues related to compliance procedure for the excise duty, including records to be maintained, forms to be filled, operating procedures and other relevant issues.
The sub-committee of a high-level panel constituted earlier to suggest steps to sort out taxation problems being faced by trade and industry will have three representatives from the industry.
Jaitley 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.
Meanwhile, Uttar Pradesh Sarafa Association has decided not to celebrate 'Holi' this year against the Budget proposal to impose 1 per cent excise duty on non-silver jewellery, President Mahesh Chander Jain told
