By Anil Mathews (ScrapMonster Author)
April 11, 2016 07:47:33 AM
NEW DELHI (Scrap Monster): The Indian Finance Minister Arun Jaitely has defended the government’s decision to impose 1% excise duty on gold jewellery. It must be noted that the ministry had proposed 1% excise duty on non-silver jewellery items.
According to the minister, there is no reason why a luxury item like gold should be kept out of manufacturing tax like excise duty. He noted that taxes are levied on essential commodities like steel, cement, jute, cotton etc. Gold will also be kept under the Goods and Services Tax (GST) ambit. There are many states which levy value added tax on gold, he reminded.
A large section of jewellers and bullion traders have been on strike for more than a month now, demanding immediate withdrawal of 1% excise duty imposed on gold jewellery. They have also raised opposition to the government decision to make PAN number mandatory for gold transactions exceeding 2 lakhs. According to them, the decision may hurt gold sales during the upcoming festive and marriage seasons, when people are expected to purchase gold in bulk quantities.
The government decision came under severe criticism by the opposition. Extending support to the striking jewellers, Congress vice president Rahul Gandhi stated that the government’s proposal would crush small businessmen in the country. He added that the proposal would only benefit a few big businessmen. Meantime, the government is awaiting the report of an expert panel headed by former Chief Economic Advisor Ashok Lahiri, constituted last month to look into the demands of jewellers and traders.
The provisional figures suggest that the March ’16 gold imports totaled just over 16 metric tonnes. This is significantly lower by 88% when compared with the imports during the same month a year before. The various measures implemented by the government have led to reduced appetite for gold among consumers in the country. The government’s re-introduction of local sales tax on gold jewellery after a gap of four years and unwillingness to lower the high import duty on gold are cited as the two key reasons for the recent sharp drop in demand for gold in the country.