They shut shop in protest against hike in custom, excise duties
Amid fears of the yellow metal becoming dearer following additional duties being proposed in the Union Budget on Friday, the jewellery stores across Karnataka will remain shut for three days from Saturday in protest against the proposals that could perhaps bring back gold smuggling.
The decision to shut business came after the call from the All India Gems and Jewellery Trade Federation in protest against the budget proposals made by Finance Minister Pranab Mukherjee.
Not only will the cost of gold jewellery go up, hurting thousands of customers, but it will also squeeze out smaller jewellers from business in the already price-sensitive market, said S. Venkatesh Babu, president of the Bangalore Jewellers' Association. “Higher duties could encourage gold smuggling once again,” he feared.
While customs duty on import of gold has been increased from 2 per cent to 4 per cent, a 1 per cent excise duty has been proposed on jewellers with a turnover of over Rs. 4 crore, he said. “Already, jewellers were burdened with 2 per cent VAT and 2 per cent customs duty. This additional customs duty will only increase the burden,” he said.
Stating that all these taxes would eventually be passed on to customers, he said: “Proposals to increase taxes is disturbing and disappointing. More than 50 per cent of the total turnover in gold business comes from the unorganised sector, which will be affected. Sales could decline over the next few months.”
Seeking a rollback on the duties, the federation has said that it would bring back the bitter memories of the time between 1962 and 1992 when control measures killed the sector.
A release from the federation said that the industry is still struggling from the after-effects of the 2008 recession. On the removal of excise duty on silver jewellery, Mr. Babu said that though it is a good move, the market size is negligible.