1% worry, 99% fear: why Indian jewellers are striking
The bullion market on Friday responded to the strike call of Madras Jewellers and Diamond Merchants Association on the excise duty hike issue, and will remain indefinitely closed. So why are they on strike?
Jewellers throughout the country have been on strike since March 2, ostensibly seeking rollback of the 1% excise duty that finance minister Arun Jaitley proposed to levy on gold and jewellery sales in Budget 2016-17.
However, there may be more to it than meets the eye.
According to finance ministry sources, the jewellers are more concerned about the ramifications of ‘compliance’ with excise conditions, rather than payment of the actual levy.
“What bothered jewellers was the regular and frequent visits by excise officials ... that lead to harassment and they were seeking a solution to that,” one finance ministry official who was present when a delegation of jewellers met the finance minister earlier this week.
The finance minister is said to have assured the delegation he would look into their grievances, but the strike is still on.
Keen to crack down on black money, the government is trying to bring in various sectors where cash transactions are common, under the tax ambit. The gold and jewellery trade has never paid excise duty.
While not admitting in as many words, the industry does admit the fight is not purely about the 1% duty.
Ashok Minawalla, director with the Gems and Jewellery Trade Federation (GJF), who was also present in the meeting with the finance minister, said, “Paying additional revenue is not an issue as it will be passed to the consumer. Harassment that jewellers face from the excise department and the fact that excise laws are complex and the industry cannot comply them, these are our reasons behind the strike.”
Other similar suspect sectors include real estate and retail grocery. A Bill to form a regulator to govern the real estate sector has been introduced in Rajya Sabha on Thursday.
“It is like listing a company,” one official said. “The norms that will bring in transparency will mean they can’t hide or fudge things, so obviously they are protesting.”
Excise duty will be paid on a monthly basis with a simplified quarterly return form.
In a clarification on last Friday, the ministry of finance said that the additional levy will only be imposed on jewellers whose turnover was more than Rs 12 crore.
“Only if the turnover of a jeweller during the 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 next financial year. Such small jewellers will be eligible for exemptions up to Rs 50 lakh for the month of March 2016,” the clarification said.
Further, they have also been given the option of centralized registration so that jewellery manufacturers do not need to take separate registrations for all their premises. Registration will be granted within two days and there will be no post registration physical verification of the premises. They have also been spared the need to maintain separate records for the excise duty.