Jewellers began a three-day pan-India strike on March 3rd to protest the Budget 2016-17 proposals which envisaged re-imposition of 1% excise duty on gold and diamond jewellery and mandatory quoting of PAN by consumers for transactions above Rs.2 lakh.
Finance Minister Arun Jaitley has proposed a 1% excise duty on jewellery without input credit, or 12.5 % with input tax credit, on jewellery (other than those studded with diamonds, ruby, emerald or sapphire).
The industry reiterates that it cannot comply with the due diligence and requirements as proposed under the Excise Act as the manufacturers of Gems & Jewellery are in no position to follow up with even the minimum provisions applicable.
The Finance Ministry has issued a statement since to clarify that even for the 1% excise duty, manufacturers are allowed to take credit of input services, which can be utilised for payment of duty on jewellery. He has pointed out that the Budget provides for excise duty exemption limit of Rs 6 crore in a year for Small Scale Industries in jewellery business (as against normal limit of Rs 1.5 crore).Thus, only if the turnover of a jeweller during preceding financial year was more than Rs 12 crore, he will be liable to pay the excise duty. Jewellers having turnover below Rs 12 crore during preceding financial year will be eligible for exemption up to Rs 6 crore during the fiscal. Such small jewellers will be eligible for exemptions up to Rs 50 lakh for the month of March 2016.
Indirect tax proposals come into effect from the date Budget is presented in Parliament and so the exemption for small jewellers, with turnover of less than Rs 12 crore a year, would be Rs 50 lakh in March.