Budget 2016: Gems, jewellery sector disappointed with 1% excise duty proposal

The gems and jewellery sector has expressed disappointment over the government's proposal to impose 1% excise duty in Budget 2016, saying the issue of mandatory PAN card was also not addressed.

Finance Minister Arun Jaitley on Monday proposed a 1% excise duty on jewellery without input credit or 12.5% with input tax credit on jewellery, excluding silver other than studded diamonds and some other precious stones.

"We are disappointed with the Budget 2016. The proposed 1% excise duty will reduce the ease of doing business as the gems and jewellery sector consists of less educated but highly skilled manpower, who are not equipped to deal with the cumbersome process required for it," All India Gems and Jewellery Federation (GJF) Chairman Sreedhar G V told PTI.

He said, the proposal will affect the sector, which is already grappling with challenges after the government's decision to make PAN cards mandatory for any transactions of Rs 2 lakh and above in January.

Echoing similar views, India Bullion and Jewellers Association (IBJA) has said the levy will create more trouble and make jewellery costlier. IBJA will make a representation to the Finance Ministry with its demand to roll back the excise duty.

RiddiSiddhi Bullions Managing Director Prithviraj Kothari has said, overall, it was an average Budget for bullion industry as not much modifications were made as far as the policies and regimes are concerned.

Gems and Jewellery Export Promotion Council Chairman Praveen Shanker Pandya has said it was a good Budget overall, as the government has given a lot of incentives to small and medium-sized enterprises (SMEs) and most of the manufacturing in the sector falls under this category.

Madras Jewellers and Diamond Merchants' Association President Jayanthilal Challani has said the proposal to levy 1% excise duty would create an additional burden on trade which was already suffering.

World Gold Council India Managing Director Somasundaram PR has said, at a broader level, the Budget 2016 is positive as it focuses particularly on the farm sector and the rural economy, which are the primary drivers of gold demand.

"A doubling of rural incomes by 2022 would provide a significant opportunity, as gold remains a preferred option for wealth preservation and will remain so amongst millions of people," he pointed out.