Jewellery sector in Karnataka upset with budget, real estate smiles

The state budget was received with mixed reactions from various quarters. While it generated criticism from the goods sector for being regressive in nature, auto and real estate majors said it would have little impact on their industries.

For some reason, precious metal and stone jewellery sector has been penalised the most by the state government as it raised value added tax (VAT) from 1% to 2%. This has upset the jewellery industry.

“Last fiscal, this industry had contributed Rs100 crore to the state exchequer. If the government believes that this figure will double and rise to Rs200 crore, there is a grave error in judgment. An increased VAT will compel the smaller players to evade taxes and not fully declare transactions. This will further fuel a destabilisation in the industry,” said Vinod Hayagriv, chairman, All India Gems and Jewellery Trade Federation.

In contrast, the budget received better response from the real estate sector. The government has proposed a reduction in stamp duty from 1% to 0.1% subject to a maximum of Rs 20,000, payable on agreement of sale, wherein there is no delivery of possession of property.  The stamp duty will also be reduced from 3% to 2% in respect of the transfer of property.

JC Sharma, managing director of Sobha Developers, said the real sector will not be impacted in a major way.

The state had little to offer for the auto industry. It has proposed to allocate a sum of Rs20 crore every year towards Urban Transport Fund.