What do jewellers expect from Budget 2017? GJF legal committee chairman weighs in

The gems and jewellery sector has been the black sheep of the economy, with all the fingers pointing towards them when it comes to black money. The sector has also been struggling to keep its momentum of sales going because of the several steps and "efforts" taken by the government to rein in the use of black money to buy gold and gold jewellery which is kept as an investment. 

Indians are known to be hoarders of gold, a medium used by many small businessmen, housewives, and for keeping it aside for weddings, etc. According to a recent World Gold Council (WGC) report, Indians hold nearly 23,000 to 24,000 tonnes of gold worth $800 billion, making them the world's largest hoarders of the precious metal. 

The jewellery sector in the country has been struggling since the Budget was announced last year. In it, Finance Minister Arun Jaitley levied 1% excise duty on non-silver jewellery to bring luxury goods under the purview of taxes. PAN cards were made mandatory for buying jewellery worth over Rs 2 lakh to make sure a money trail was created. Both the moves have kept buyers at bay. Then came the demonetization masterstroke which eroded the purchasing power of the people, directly impacting jewellery sales. In a single sweep Prime Minister Narendra Modi removed 86% currency (in value terms) from the economy by de-legalising the use of Rs 500 and Rs 1000 notes. 

At a time when the jewellery market is desperately looking for a way out of its pit, Dr C Vinod Hayagriv, Managing Director, C Krishniah Chetty & Sons and Chairman, Legal Committee, All India Gems and Jewellery Trade Federation (GJF) weighed in on what the sector expects from Jaitley

⇒ Don't paint entire industry with one big brush. 

⇒ Reduce import duty on gold to 4% - 5% from current 10%.

⇒ Remove PAN card requirement for cheques/ DD/ bank transfers and better still, make an even playing ground for all in the country by mandating PAN card requirement for each and every transaction over Rs 1000/- (not just gems and jewellery or real estate but for any transactions). 

⇒ A strong measure is required to remove corruption which still exists even after demonetization. This is the right time to bring in stronger measures to ensure transparency. If not, the country will suffer more. 

⇒ Reduce import duty on scientific/ testing/ equipment used in gems and jewellery sector to 12% from current 28%.

⇒ Maintain GST at special slab of 1-2% only. 

⇒ Amend company law for private companies not mandating current 2% of net profits towards charitable causes. Profits of Indian companies need to improve to allow this. 

⇒ Reduce maximum corporate and personal income tax by a minimum of 5% from current levels. 

⇒ Allow or mandate banks to lower interest costs. 

⇒ Encourage zero interest loans for education to improve skills. Today there may be more educated people but they are not fit to work yet. 

Earlier, GFJ chairman Nitin Khandelwal had sought to increase the PAN card rule to transactions over Rs 5 lakh to avoid an impact on the sector. "With the implementation of the PAN card limit of Rs 2 lakh, the industry has been facing serious challenges.
Organised sector, which is growing by at least 2 per cent every year since past decade is directly hit due to this. We request the government to bring the PAN card limit to the earlier level of Rs 5 lakh and above," he had told PTI. 

He also sought a reduction of import duty on gold to 5% in the upcoming Budget. "The high import duty on gold bullion at 10 per cent has been adversely affecting the industry. This has built a parallel economy, leading to wide scale gold smuggling. It is also affecting domestic retail and manufacturing industry adversely. Bringing down duty to at least 5 per cent will eliminate the grey market," he said. 

The Gems and Jewellery Export Promotion Council (GJEPC) has also said that it is expecting a cut in gold import duty to 5% in the Budget.