Jewellers are keeping their fingers crossed ahead of the festive season as sales have been subdued for the past few months. While jewellers expect good harvest to boost rural demand, high gold price and the Centre’s drive against black money could prove to be a dampener.
“Apart from the price, customers are a bit hesitant to buy jewellery in cash as they are scared of the income tax department,” Indore Sona Chandi Vyapari Sangh president Hukumchand Soni told HT.
Earlier, people buying jewellery above Rs 2 lakh in cash had to produce their PAN card, but under the new norms jewellers have to keep a record of client details for purchases made in cash even below Rs 2 lakh.
Gold prices at Rs 31,500 per 10 gram are ruling high as compared to three months ago, but jewellers are expecting good demand from rural areas. Indore being a major market attracts a large number of rural buyers after the harvest season in October and November.
“The monsoon have been good and usually the festive sales pick up from Dusshera, so we will know in a few day’s time,” Soni said.
Demand for gold jewellery has hit a low in 2016 due to different factors including a rise in gold prices and introduction of `2 lakh limit on tax collected at source (TCS). The TCS step has been taken to curb tax evasion and check black money transactions. The tax is collected by the seller from the buyer at the time of sale and is deposited with the government. TCS of 1% was imposed on cash purchase of jewellery worth `5 lakh or more.
Indore Sarafa market suffered a loss of more than Rs 1,200 crore during the six-week-long strike against 1% excise duty which the government refused to roll back.