18th January 2022: Post the impact of Covid’s first and second wave in 2020 and 2021 respectively, the Gems & Jewellery industry was on the recovery route, however, the fear of the new virus variant Omicron looms large and there are talks of restrictions and additional curbs. India’s gem and jewellery business and allied businesses continue to suffer and face the brunt of the pandemic for nearly two (2) years now. Business has been slack due to lockdowns and curbs on retail sector; customers are not spending much on jewellery; and the MSME jewellers, craftsmen and artisans --- who comprise the bulk of the indigenous industry, are not able to claim any respite or relaxation in spite of their growing woes and stress.
All India Gem & Jewellery Domestic Council (GJC), the national apex body of the gems and jewellery industry, has suggested the Union Finance Minister (FM) through their Pre Budget-Recommendations 2022-23 to reduce the rate of GST to 1.25%. GJC has also urged FM to raise PAN card limit from Rs. 2 lakh to Rs. 5 lakh rupees citing that many households in rural India do not hold PAN cards and face difficulty in arranging minimum required jewellery in times of need especially post pandemic.
GJC has urged the government that suitable clarification be issued on the minimum quantity of Gold, which an individual can deposit under the Gold Monetisation Scheme (GMS), without being questioned by any departmental authorities. GJC has also requested that the EMI facility for purchase of 22K gold jewellery should be allowed to the Gems & Jewellery industry which in turn shall lead to substantial growth of the business of the industry post pandemic.
Mr. Ashish Pethe, Chairman GJC, said, “Our industry has suffered a lot during these harsh times of the pandemic, and it is also identified as one of the ‘stressed sectors’ in Mr. K V Kamath’s report. Hence, GJC has proposed changes in Section 40A of the Income Tax Act so that the existing daily cash limit of Rs. 10,000/- per day be increased to Rs. 1,00,000/- per day. GJC has also urged the government to waive off the bank commission (1-1.5%) on purchase of jewellery through credit cards thus ensuring a good boost to the ‘Digital India’ for the G & J Industry. We are confident and hopeful that there may be good reliefs announced for our industry during the Budget session.”
GJC urged 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 Gems & Jewellery Industry. This will help the industry to move towards organized and compliant business practices, said GJC.
GJC has sought a cumulative GST rate of 1.25%, based on Revenue Equivalence Principle on gold, precious metals, gems, and articles of jewellery made of such goods. Earlier, jewellery was subject to excise duty of 1% (without Input credit) or 12.5% (with input credit). However, jewellery was subject to excise duty only if the total turnover crossed the threshold limit of Rs. 10 crore. Accordingly, a very small segment of the industry (approximately 15% to 20%) was subject to excise duty on. Further, the jewellery was subject to 1% Value Added Tax (VAT) in almost all states (except Meghalaya, Kerala and Tripura). Hence, the effective tax on indigenously manufactured gems and jewellery articles for majority of the players was 1% or at the most 2%.
The Gold Monetisation Scheme (GMS) was introduced by the Honourable Prime Minster in 2015 to turn gold holdings into an earning asset by allowing residents to deposit physical gold- bars, coins or jewellery - into a Gold Savings Account – the idea being to mobilise domestic gold to be channelized for productive use in the system. However, the total deposits accumulated by the banks under the GMS are around 11.1 tonnes, which is a meagre number as compared to the estimated holdings of 23,000-24000 tonnes. Also, making the GMS more effective is important to address the widening current account deficit (CAD) issue. GJC, being a responsible trade body would like to emphasize upon the point that Government must clearly give exemptions to households for minimum 500 grams of gold deposited, being of ancestral nature, from questioning by any tax department. The same will make GMS more effective and benefit the government and participants at large, said GJC.
About GJC: All India Gem and Jewellery Domestic Council (GJC) represents lakhs of trade constituents comprising manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and allied services to the domestic gems & jewellery industry. The Council functions with the objective to address the industry, its functioning, and its cause with a 360° approach to promote and progress its growth, while protecting the industry's interests. GJC, since the last 15 years, has been serving as a bridge between the government and the trade by undertaking various initiatives on behalf of and for the industry.
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