Hassle free transit of Jewellery: we recommend that the Government allow the GJF to issue smart cards to enable smooth transit of precious material in the absence of reliable courier services.
Jewellery being precious and always susceptible to theft, an appropriate procedure and documentation for people in transit while carrying Jewellery for trading purposes across India should be developed for Hassel free transit at airports, railway stations, octroi check post etc. The crucial condition for checks or transit of material is whether the jewellery is stolen or bonafide This can be easily catered for by our Federation issuing auditable Smart chip based cards which can serve as identity and security including VAT etc. numbers to provide hassle free transit of jewellery. RECOGNIZE GJF ISSUED ID CARDS AT AIRPORTS AND STATIONS.
We recommend allocation of separate budgets for educational, training & development programs of Rs. 350 crores.
As mentioned above jewellery manufacturing and retailing is till primitive and hence huge resources are required for the education, training and development of the industry from manufacturing capability to testing to accurate representation to design to retailing and given that jewellery in the country is mostly a handmade giving job to millions of workers. Budgets for Training and development institutes should be allocated to develop and create employment in this industry. We recommend investment into infrastructure to be set up for upliftment of the industry through setting up of technology parks in the five locations in India.
We recommend that the Government provide Rs.75 crore budget for promotion of gems and jewellery of the retailtrade in gems and jewellery and also exempt the application of the Lottery Act for ONE national shopping festival yearly across India :
The Indian Gems and Jewellery Industry has the potential to grow ten times it’s current size within 5 years. The need of the hour is high quality control and focused business promotion promoting fair practices across the whole country.
A national promotional budget should be allocated through The All India Gems & Jewellery Trade Federation / National Council of Gems and Jewellery which may be monitored by the industry body. The industry works on very slim margins of 10% but is still the highest foreignexchange earner for the country. With the help of these promotional budgets the country can be developed as the jewellery hub of the world like our neighboring countries’ for e.g. erstwhile Dubai, Singapore andChina.
We welcome a constructive dialogue with your good selves for promoting the industry preventing migration from the industry and helping increase manufacturing strength, standards and quality of design and workmanship.
We recommend an amount of Rs.75 crores be set aside for gems and jewellery trade promotion in the retail arena for the whole country for the year 2011-12 along with a specific exemption of the Lottery Act for this festival.
We recommend free Import Of Gold Under OGL for all who have an annual turnover of Rs.50 crores (liberalise beyond the 20 channelising agencies), with special permission for the GJF to imort and distribute bullion as a trade body to its members.:
Currently gold as raw material is allowed to be imported only by 20 or so channelizing agencies. This is leading to shortages and price disadvantages. This leads to erratic demand and supply leading to detrimental growth of business. Therefore we recommend strongly that gold be allowed under the following two options:
b. Empower the GJF/ National Council of Gems and Jewellery to also import gold in marked bar form and/or in any purity/form to supply to the industry in addition to the channelizing agencies if OGL is unsuitable currently.
We recommend to make mandatory HALL MARKING of jewellery, and sharing of the draft bill with GJF for easy implementation:
The All India Gems & Jewellery Trade Federation WILL BE ABLE TO HELP IN MAKING A PRACTICAL ACT AND RULES. If the draft bill is ready GJF will work with the Government to not only implement the same but also help make the act practical without objections at a later point. WITH ADVANCED MANUFACTURING PLANTS TODAY, CAPTIVE IN HOUSE HALLMARKING SHOULD BE ALLOWED FOR LARGE RECOGNIZED MANUFACTURERS BY BIS, RATHER THAN SENDING OUT THE JEWELLERY TO SMALL HALLMARKING CENTRES THAT ARE UNABLE TO HANDLE LOAD OF WORK.
Rationalisation Of VAT and GST: We recommend that uniform VAT rates of 1% be implemented across India and maintain the same rate.
Although we are aware that the recommended VAT on the jewellery industry is set at 1% consistently maintaining this percentage for several years will bring about confidence within the industry to become more transparent and reduce evasions. This may be impressed at all levels with the concerned state Governments, of maintaining tax rates as recommended by Union Government at 1%.
In spite of directives from the Central Government some states continue to levy VAT/octroi at differential rates beyond 1% that is recommended.
We recommend that even when the GST is implemented, the rates for GST for the Gems and Jewellery trade is maintained at similar or lower even in the future. Other than above, focus of Government should be on GST rollout.
Abolition Of CST:
While implementing VAT regime it was suggested that CST will be phased out in 2 years time, which has not been phased out yet. We request you to abolish CST or alternately input credit should be allowed for CST paid.
Increasing Audit Limits:
We recommend the audit limit for small business firms in the Gems and Jewellery sector be increased from current levels of 40 lacs to 7crores per annum to avoid unnecessary hardship and cost to small traders.
The artisans, engaged in the Gems and Jewellery industry, are in a manner engaged in the production of articles of handicraft. The Policy of the Indian Government has always been to foster Indian handicraft, which in turn would aid the economic and financial prosperity of the lower and middle income groups engaged in this activity.
Today the cost of 1 kg gold is around Rs.30,00,000. A small jeweller should do a business of 3 kgs in a month, which comes to around Rs.10,80,00,000 per annum. He therefore becomes eligible for mandatory annual Audit. Hence we recommend that for Gems and Jewellery Sector Mandatory Audit provision be enhance from Rs.40,00,000 lakhs atRs.7.00 crores per annum.
Abolishment of Wealth Tax:
Werecommended Wealth Tax beabolished on Gem and Jewellery..
As the collection is hardly 50 to 100 crores for whole country and valuation and other problems exist with such wild fluctuations in the jewellery market. This is too old, a tax to continue. This should have been removed along with Estate Duty.
Gold Loans:
We recommend that banks be instructed to issue gold loans the rate of 2.50% to 3.5% pa, thereby increasing compliant trade and reducing tax under compliance.
Gold loans are beneficial for the growth of the Gems and Jewellery sector.
The Gold loan scheme was developed to boost the domestic as well as export sector of the gems and jewellery industry to give them low cost working capital. Gold was loaned to jewellers and they had time of 180 days to fix up a price for the loaned gold. The interest on the loan varied from 2.5% to 3.5%. Many jewellers expanded their business by availing the scheme thereby reducing their inventory cost. Since October 2008 major banks have terminated the loans or stopped giving new loans. Many banks have converted the Gold loans into term loans or cash credit at 15% per annum interest. The result is that is has put organizations in great difficulty over night as they had to arrange to return the capital in totality or have it converted to high interest factors. This has been a deterrent to the industry at large.
A stringent policy needs be formulated in this regard where for no fault of a lender his business should not be put in jeopardy. A positive policy needs to be put in place in this area which shall develop and bring growth in the industry. Banks ought not to remove existing gold loans abruptly.
Further, it is recommended that bank issue gold loans with a provision of repayment in gold weight or in cash at their option. We also recommend that tenure of gold loans to be increased from 180 days to 365 days based on performance of jewellery company’s balance sheets, specially in regard to healthy balance sheets and healthy track records. RBI circular with reference to this is enclosed for your ready reference.
Presumptive Turnover Tax regime:
We recommend that the current form of taxation should be modified to allow presumptive tax option based on the turnover.
As requested in the export sector, the domestic industry is also eligible for presumptive tax regime option for businesses. Organized retailing of gold and diamond in India should be rewarded with a slab form of tax on the total turnover instead of the existing scheme of taxation which is very high and impractical for accurate assessment of profits for the industry, also due to insufficient technology to assess accurate closing stocks thereby leading to be widespread hardship.
Recognize the gems and jewellery trade as an industry – accord industry status. Accord GJF “COUNCIL” status.
We recommend that jewellers be provided low-cost capital from banks at rates below 8% per annum, due to low profitability, and shrinking quantities of sales due to high prices.
We recommend Capital gains exemptions for investment.
At present capital gains earned on sale of any capital asset is allowed as deduction if the gross proceeds is invested in any residential house. Jewellery being a social investment and it is an indispensable item of a wedding occasion, the industry request the Government to exempt capitalgain that arise from sale of any capital assets if the gross proceeds is invested in jewellery.
Representatives from the Gem and Jewellery Industry should be inducted in the committees of the Finance Ministry for giving positive suggestions. We thoroughly believe that the above recommendationsshall facilitate the Gems & Jewellery Industry in order to make India a Global Jewellery Hub of the World.
Reduce baggage allowance for NRI’s returning to India after staying more than 6 months abroad
The difference between Customs duty paid gold and smuggled gold due to already existing customs duty has been encouraging a hawala trade through passengers bringing gold as hand baggage.
We recommend that this route be curbed by reducing the allowance of such hand baggage to 3.00 kgs per passengers instead of the existing 5.00 kgs.
Abolish excise duty on all jewellery. The present duty on branded jewellery is inappropriate as it leads to misinterpretation and harassment across the country where jewelers are being force-fitted into payment. We suggest that GST take care of this amount of collection.
PAN number requirement for transactions above Rs 5,00,000: The last budget of 2011 imposed a requirement of PAN card for jewellery retail transactions over Rs 5,00,000. We recommend this limit be raised to Rs 25,00, 000 as PAN card collection for lower amount transactions are proving to be impractical. Further the fine for non-compliance as per existing rules is stated as Rs10,000. However there needs to be a clarification that the fine is per annum or per return as this is subject to interpretation and may result in demands of Rs10,000 per transaction.
The author is Chairman, All India Gems and Jwellery Trade Federation (GJF)