The three-week strike by gold jewellers and bullion traders in March has had its desired impact. Finance Minister Pranab Mukherjee has rolled back the excise duty on branded and unbranded precious metal jewellery.
A strike was called on Mar 17 by the All India Gems & Jewellery Trade Federation protesting the 1% hike in excise duty on unbranded jewellery and doubling of customs duty gold imports proposed in the Union Budget 2012-12 on Mar 16.
The strike was called off on Apr 6 after the government assured jewelers that their dmenads would be considered.
According to industry body, All India Gems & Jewellery Trade Federation, the strike resulted in the loss of revenue to the tunes of Rs.200bn during the strike.
“The Finance Minister has understood our problems and removed the tax on both branded and unbranded jewelry,” reports said quoting Bachhraj Bamalwa, Chairman, All India Gems & Jewellery Trade Federation. “Demand should recover from now and imports will improve as jewelers who had not stocked up earlier will start buying.”
The duties were proposed with the aim to control current account-deficit which was being fuelled by record bullion purchases, reports said earlier. However, several traders, jewellers, artisans and goldsmiths were opposed to the move on the grounds that the industry was unorganized and fragmented and it would be difficult to comply with the new provisions, reports said.
India, the world’s biggest bullion importer, bought only 30-35 tonnes of the yellow metal in April, down from 90 tonnes in the same month a year ago. The higher taxes reduced the demand for gold, said Prithviraj Kothari, President, Bombay Bullion Association.
The FM also announced an increase in the threshold limit for tax collected at source on cash purchase of jewellery from to Rs.5 lakh Rs.2 lakh.
The same threshold will be applicable for bullion items such as coins below 10 grams. However, for all other bullion items, tax deducted at source will be levied at the cash purchase of Rs.2 lakh or more and the rate will be 1%.