Jewelers concerned over ‘brand’ tax

Things aren’t too glittery for Indian jewelry retailers at

the moment. Recently they met the FM to express their stand on the proposed 1 per cent excise duty on branded jewelry. The tax was introduced in this year’s Union Budget. They do not agree to the way the term “brand” is interpreted by the government. Jewelry retailers agree that ‘brand’ has in the past been loosely defined to constitute any piece of jewelry with an identifying mark on it. Many Indian retailers use some identifying mark on the jewelry they sell to help in case of repairs or refurbishment. Also it makes valuation easier. In the past, this led to revenue officials seeking stock seizures and a general disruption of business, accompanied by a slew of contentious litigations. While it got no repeal of the proposed tax, the minister and other government departments said that the government’s intent was to levy the duty only on those products that were clearly ‘brands’ as described under law. The government departments said that the new levy was intended only for those who wish to continue selling jewelry under specific product brands and would distinguish between a branded product and a retailer’s name, which stands as a ‘brand’ for many consumers. Such brands would include Nakshatra, Asmi and Sangini.

Gems & Jewellery Trade Federation (GJF), chairman Vinod Hayagriv added that excise duty is levied only on manufacturers and never on retailers. Thus, the determination of whether or not a product is a brand needs to be made upstream, when the jewelry is fabricated. This is a problem in the Indian jewelry retail industry, where a vast majority of retailers have some in-house fabrication. This duty can’t really be applied to jewelry retail and it will become a forced levy Hayagriv feels. He says the government has asked them not to litigate but to refer any contentious levies to the Central Excise Board in Delhi, where it will expeditiously be dealt with.