Buyers are shying away from buying gold, the traditional favourite for parking money, thanks to the ongoing cash crunch and the fear of coming under the tax radar.
Sales of gold jewellery from the organised retail segment almost halved in the last one month, despite people queuing up outside jewellery shops to buy the yellow metal to get rid of their old banknotes.
“Sales have plummeted by around 50% as people are not comfortable buying jewellery at this point in time. They are only indulging in need-based buying based on family requirements such as marriage,” said Ashok Minawala, director, All India Gem & Jewellery Trade Federation (GJF), which represents 250 jewellery associations and over 1,00,000 jewellers in India.
Popular offline jewellery retailers, including Tanishq and Kalyan Jewellers, did not comment on the story.
Even online sites are feeling the heat.
“In the first three to four days after demonetisation, our average daily sales fell almost 50% of our daily average,” said Atul Sinha, senior vice-president, marketing at Titan Industries-owned CaratLane. The company’s cash on delivery (COD) orders constituted 45% of its online sales before demonetisation. “Now, they have come down to 20%,” Sinha said.
Another portal, Bluestone.com, echoed a similar trend. “Almost 35% of our business came through COD. However, after demonetisation, we have seen up to 30% drop in sales in this segment,” said Arvind Singhal, COO, BlueStone.com.
The income tax department has been cracking down on jewellers across India, since the demonetisation exercise was announced by the government on November 8. “We have intensified our searches across the country and based on our internal reports, we will continue holding such search operations,” a senior official of the tax department told HT.
While frequent searches have created panic among people, the government has said that legitimate holding of any quantity of gold and gold jewellery will not come under the scanner.
Jewellery and ornaments to the extent of 500 grams for married women, 250 grams for unmarried women and 100 gram for male members will not be seized, even if the income record of the assessee did not match, the finance ministry had said earlier.