New Delhi: India's Finance Minister Pranab Mukherjee Monday decided to roll back the proposed 1% excise duty on unbranded jewelery and the 1% already imposed on branded jewelery, providing relief to jewelers who had shut shop for 20 days in protest after the announcement of the levy in the Union Budget 2012-13.
"The Government has decided to withdraw the levy on all precious metal jewelery, branded or unbranded, with effect from March 17, 2012," Mukherjee told Parliament while moving the Finance Bill 2012 for consideration.
"I would like to reiterate that the levy was well intended and introduced not so much for raising revenue as for rationalization and movement towards GST (goods and services tax). However, the outpouring of sentiments, both within and outside the House, indicates that we are not yet ready for it," he said.
Mukherjee also raised the threshold limit for TCS (tax collection at source) on cash purchases of jewelery to Rs 500,000 from the Budgetary proposal of Rs 200,000.
The Budget had proposed TCS by the seller at the rate of 1% of the sale amount from the buyer for all cash transactions exceeding Rs 200,000, to check unaccounted money in bullion and jewelery trade.
"Responding to the representation made by the jewelery industry that this would cause undue hardship, I propose to raise the threshold limit for TCS on cash purchase of jewelery from Rs 2 lakh (Rs 200,000) to Rs 5 lakh (Rs 500,000)," he said.
However, the threshold limit for cash purchase on bullion shall be retained at Rs 200,000. Bullion will not include any coin or other article weighing 10 gram or less, he said.
Mukherjee also left unchanged a proposal to double the import tax on gold to 4% from 2%.
The proposal to bring unbranded jewelery in the ambit of 1% excise duty on branded jewellery had triggered protests by jewelers all over the country, a day after the Budget announcement on March 16. Branded jewelry already attracted a 1% tax.
The import duty hike on gold to 4% and the tax levy on unbranded jewellery was expected to slash demand for the yellow metal to 655 tonnes in 2012 from 900 tonnes in India, the largest consumer of the precious metal in the world, according to a Reuters poll.