Union Budget is disappointing, unfortunate & Not in sync with Make in India!
All India Gem & Jewellery fraternity
thanks
H’ble FM Smt Nirmala Sitharaman ji
for the Union Budget 2019 – 20
However, Gold will now
become more expensive in India!
Union Budget is disappointing, unfortunate
& not in sync with Make in India principles:
Says GJC about hike in Gold import duty in
Union Budget GJC demands rollback and
further reduction in gold import duty to
avoid increase in domestic prices,
encourage cross border smuggling and unfair
trade practices.
All India Gem and Jewellery Domestic Council
(GJC) has termed the proposed increase in import duty of gold from 10% to 12.5%
as disappointing and unfortunate; adding that Gold will become more expensive
in the country. GJC had sought immediate rollback and further reduction in
Import Duty on Gold.
GJC has said that this will have a negative
impact on the indigenous Gem & Jewellery industry, which predominantly
comprises handcrafted and labour intensive craftsmen. Over 55 lakh skilled
labour forces engaged in manufacturing of jewellery in the domestic sector are
likely to get negatively affected.
Mr. Anantha Padmanaban, Chairman, GJC, said,
“The indigenous gems & jewellery businesses are disappointed with the first
Union Budget of Hon. Prime Minister’s Modi 2.0 Government. This is not in tune
with Make in India principles.
The increase in customs duty for gold, which
is our basic raw material, coupled with GST will make gold more expensive and
encourage smuggling. Genuine and law-abiding businessmen will get affected!
GJC had suggested the government to make the
Gold Monetization Scheme (GMS) more effective and benefit the government and
citizens at large but there is no mention of the same. The sharp hike and
volatility in gold prices will further compound problems of jewellers.”
The 10% Import Duty on gold was levied to
curb Current Account Deficit. However, India's trade deficit narrowed to 2.5%
of GDP in 2019. Reduction in the gold duty will directly reduce other social
& economic menace in the country.
To unlock family gold reserves of up to
24,000 tonnes and help reduce CAD, GJC urged that Government must give
exemptions to households for minimum 500 grams of gold deposited under Gold
Monetary policy, being of ancestral nature, from being questioned by any tax
department.
Mr. Shaankar Sen, Vice Chairman, GJC, said
“The Government has exempted start-ups receiving funds/ investment from scrutiny
but the gems & jewellery sector businesses neither get funds or investments
but are always under scrutiny. Jewellers fighting for survival will get tempted
towards grey market dealings. On the positive side, GJC welcomes the
Government’s initiative to launch a Mission which will help talented artisans
to the world markets.”
The Government has proposed tax rate of 25%
for Corporates with annual revenue of upto Rs. 400 crore. A majority of the
players in the Gems & Jewellery Industry are either Partnership (Including
LLP) or Proprietorship firms. In order to promote manufacturing in this sector
and support ‘Make in India’ initiative of Government of India, jewellery
manufacturing machines import duty should be 0%.
GJC had requested the government that in case
jewellery sold is reinvested in new jewellery, the exemption from Capital Gain
as per Section 54F of the Income Tax Act 1961 should be the extended to G&J
Industry. This will help the industry to move towards organized and compliant
business practices.
In case of remaking of new jewellery from old
jewellery or old gold, GST is applicable @18% on labour charges. Due to high
rate of GST, the customers are reluctant to go for this option. The other
option left with customer is to sell the old jewellery and buy new jewellery.
However, as there is Capital Gains Tax involved, customers are hesitant for
this option.
GJC has proposed key customer-friendly
initiatives such as exemption from Capital Gains; enhancement of cash limits
and PAN Card limits; extension of EMI facility and availability of NEFT/RTGS on
weekends.
In the recent past, it has been observed that
more transactions are happening online. Also, most of the buying takes place on
Sundays and public holidays where Banking channels like NEFT / RTGS are not
available. GJC urged that the NEFT/RTGS facility should be available on
holidays and Sundays when there is maximum buying by the customers.
GJC recommended raising PAN card limit from
Rs. 2 lakh to 5 lakh. Many households do not hold PAN cards specially
agriculture sector. Hence, they face difficulty in furnishing the same upon
requirement.
GJC urged the Government that the facility of
EMI should be extended to the Gems & Jewellery industry since the Finance
Minister in the 2018 Budget has announced as an Asset Class.
Currently, loans on
purchase of jewellery are being treated as Personal Loans, where the rate of
interest is very high. EMI should be available for purchase of jewellery and
restriction should continue only for bullion and coins. This will help the
industry to move towards organized and compliant business practices.
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