In a major blow to the struggling precious metal sector, the Union Finance Minister Arun Jaitley in the Budget 2016-17 proposed 1% excise duty levy on articles of jewellery. This levy, however, is not applicable to silver jewellery other than studded with diamonds and some other precious stones.
While presenting the Budget in the Parliament on Monday, Jaitley said, "I propose to impose an excise duty of 1% without input tax credit or 12.5% with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones), with a higher exemption and eligibility limits of Rs 6 crore and Rs 12 crore respectively."
While presenting the Budget in the Parliament on Monday, Jaitley said, "I propose to impose an excise duty of 1% without input tax credit or 12.5% with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones), with a higher exemption and eligibility limits of Rs 6 crore and Rs 12 crore respectively."
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Necessary steps will also be taken to enable the new taxpayers to comply with this levy without any difficulty. "The gems and jewellery fraternity is extremely upset with this duty," said Prithviraj Kothari, a spokesperson of the apex bullion dealers’ body India Bullion and Jewellers’ Association (IBJA) and managing director of RiddiSiddhi Bullions.
IBJA said that levying of excise on Jewellery will create more trouble for the already starving industry. There are about 10 million artisans working in this industry and most of them are likely to become jobless. The association will make presentation to the Ministry to roll back the excise duty on Jewellery.
“Around 80% of manufacturing units in jewellery industry will have to close down. There will be another 1% extra excise burden on jewellery consumers in the form of tax collection at source as luxury goods for cash jewellery purchase worth over Rs 200,000," said G V Sreedhar, chairman, All India Gems & Jewellery Trade Federation (GJF).
Echoing similar response, Ashok Minawala, Director, GJF, said, “This is the third time when the government levied excise duty on jewellery. On the previous two occasions, the government withdrew it. Its implementation is very difficult as 80% of manufacturing units are in unorganized sector.
In 2012, the excise duty on Jewellery was rolled back after strong agitation by the gems and jewellery industry which continued for almost two months against levying of excise. The Gems and Jewellery industry is not against duty or additional taxes but is against the excise department which works like inspector raj, said IBJA.
