The Indian finance minister may have put a smile on the face of many with his offerings in the Union Budget, however, the gems and jewelry industry is an unhappy lot. They are disappointed over the reintroduction of 1 per cent excise duty
on branded jewelry and have asked for a roll back on the same. The feeling is that it will serve as a setback to the industry which was gradually getting more organized. As All India Gems and Jewellery Trade Federation, chairman Vinod Hayagriv says, "The reintroduction of the abolished 1 per cent excise duty on branded jewelry is a retrograde step. Five years ago, we had made representations to the government and subsequently the excise duty was withdrawn two years ago." The new duty will burden the gems and jewelry industry enormously and hamper its growth. The entire industry, he said, is working towards ethical, transparent trade practices and these kind of levies will create hurdles and encourage corruption. Moreover, what the finance minister says on the floor of the House is different from what the excise department will interpret this to be. “All jewelry with a mark, whether a house mark or trade mark or brand mark, will be construed as branded and each jeweler will need to fight the battles in court. The gems and jewelry industry is not an excise duty leviable industry. Hence, this is an ill-advised move and GJF strongly advices the roll-back of this untenable levy on branded or unbranded jewelry,” he said.
Echoing similar views, Mehul Choksi, CMD, Gitanjali Group says the decision will have a negative impact and create hurdles for the jewelry industry in becoming a modern and organized sector. He too feels the one per cent Central excise levied on branded jewelry should be reconsidered. Choksi said marginal rise in the Minimum Alternate Tax (MAT) to 18.5 per cent from 18 per cent will add to the difficulties being faced by Special Economic Zone (SEZ) developers and units operating in the tax-free trade enclaves.
However, at the same time Choksi welcomed the introduction of self-assessment for customs for import-export and simplification in procedures for refunds as well as exemption from service tax for services consumed within a SEZ.
