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Finally, Finance Bill passed in LS; tax on jewellery remains

FM defends the govt’s decision, says the tax on jewellery was much lower than what was levied by some states

Policy Pulse
Publish Date: May 5 2016 3:48PM | Updated Date: May 5 2016 4:30PM

Finally, Finance Bill passed in LS; tax on jewellery remains

Despite opposition from some political parties, Lok Sabha on Thursday passed the finance bill, retaining the excise duty on jewellers.

 

In his reply to the finance bill, Arun Jaitley defended the government’s decision and said the tax was much lower than what was levied by some states on jewellery.

 

In this year’s budget, Jaitley had proposed an excise duty of 1% without input tax credit and 12.5% with input tax credit on articles of jewellery with the exception of silver jewellery. This led to protests from artisans and jewellers who went on strike for more than 18 days.

 

The government had announced many safeguard measures to protect jewellers from harassment but that did not assuage jewellers. On Wednesday, in the finance bill debate, political parties including the government’s ally Shiv Sena and the Telangana Rashtra Samiti (TRS) and the All India Trinamool Congress opposed the levy.

 

“The issue of tax on gold has been raised. We have put adequate safeguards possible,” Jaitley said, while dismissing demands of a rollback. “You do not have problem on the 5% VAT on gold that Kerala levies. Other states also levy this tax. But you have a problem on the 1% tax that the Centre wants to levy,” he said.

 

The finance ministry had clarified that the levy will only be imposed on jewellers whose turnover was more than Rs.12 crore in the previous financial year, thus sparing small jewellers. It had also promised that an excise officer will not visit any of the artisans or jewellers, thus sparing them harassment. It had also announced a host of steps to make it easier procedurally for the jewellers to pay the tax.