In a relief to millions of jewellers across the country, Finance Minister Pranab Mukherjee on Monday announced rolling back one per cent excise duty on both branded and unbranded jewellery.
“...the government has decided to withdraw the levy on all precious metal jewellery branded or unbranded with effect from March 17, 2012,” Mr. Mukherjee said while moving the Finance Bill, 2012, for consideration and passage in the Lok Sabha.
Mr. Mukherjee in his Budget for 2012-13 had proposed to include unbranded jewellery in the ambit of one per cent excise duty as applicable on branded jewellery, a move which evoked sharp criticism from jewellers and bullion traders.
“I would like to reiterate that the levy was well intended and introduced not so much for raising revenue as for rationalisation and movement towards GST. However, the outpouring of sentiments, both within and outside the House, indicates that we are not yet ready for it,” he said.
Besides, in order to curb the flow of unaccounted money in bullion and jewellery trade, the Budget had also proposed tax collection at source (TCS) by the seller at the rate of 1 per cent of the sale amount from the buyer for all cash transaction exceeding Rs. 2 lakh.
“Responding to the representation made by the jewellery industry that this would cause undue hardship, I propose to raise the threshold limit for TCS on cash purchase of jewellery from Rs. 2 lakh to Rs. 5 lakh.
“The threshold limit for cash purchase on bullion shall be retained at Rs. 2 lakh. Bullion will not include any coin or other article weighing 10 gm or less,” he said.
Protesting the imposition of one per cent excise duty on unbranded jewellery, jewellers had entered into an indefinite strike after the Union Budget. However, following assurance from Mr. Mukherjee of reconsidering the proposal, the traders withdrew the strike after 21 days.