A Jeweller’s plea: Stop this nonsensical strike over Excise Duty

It’s been 31 days since I have closed down my business in protest against Excise Duty on Jewellery. In fact, The protest was just for the first 15 days, then it became a political slugfest and an entire industry came to a standstill without any outcome.

All this started when our Finance Minister proposed a 1% Excise Duty on Jewellery in the union budget.

First let us understand what the protest is all about. Jewellers are worried about the excise department and not on the tax being levied. They fear inspector raj, the innumerable forms and paper work and also the added burden of dealing with another department with virtually unlimited powers.

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The first thought that comes to a common businessman’s mind when he hears “Excise Department” is harassment and corruption. Naturally, we jewellers were very afraid of this and we decided to close down our business in protest (just like what we did in 2012 when Excise was introduced on Non Branded Jewellery).

Then started the negotiations with the Government. Jewellery organisations and delegations met various leaders from the Government and put forth a request to roll back the excise duty levied on us. The government patiently heard all of us. Though they categorically said that the Excise Duty will not be rolled back, they assured that modifications can be adopted as per the industry and notified.

The reasoning given by the government is as follows:

The Excise duty is being levied in line with the impending GST, which will be introduced shortly. Gold is the second largest imported material in India after Crude oil. Whereas Crude Oil being a necessary commodity and taxed at more than 100%, Gold being a luxury commodity is merely taxed between 10 to 12 %.

Almost 1000 tons of gold valued at around $35 Bn is imported every year. Only a part of it is exported and the rest is up for domestic consumption. Such a large amount of imported gold eats up the foreign revenue and imbalances the fiscal books.

After much deliberations the government agreed to demands like

  • Setting up a task force with representatives from the industry, excise department and Government, which will look into the compliance procedures and paperwork. They will submit a report within 60 days after its constitution. All the jewellery organisations will be given an opportunity to submit representations.
  • Till the recommendation of the committee is finalised, no Excise officials will visit the premises of jewellers, no search and seizure of jewellery will be conducted, no arrest or criminal prosecution and no challenging the valuation of the raised invoice will be done.

The government also issued a circular on 21st March with the said agreement.

Now what has changed after the meeting and acceptance of our demands that most of the jewellers are still agitating? Let’s have a look at the hidden truth behind the agitation.

Almost Rs. 30 lakhs can be converted into Bar of 1 kg gold easily. Thus, helping and promoting black money. We all know that Bullion and Real Estate Markets are the biggest facilitators of Black Money within India.

Now, when Excise duty is levied you have to declare all your stock holding. This is where the panic starts. Most of the jewellers had to declare stocks and they had no idea how to show it. Because most of it was either unaccounted for or they were not ready to increase the sales/purchases in books, thus increasing their turnover and coming under the tax bracket. The fear that most of the black money acquired through years in the form of gold will have to be declared is giving the jewellers nightmares.

Other than this, I don’t see any other reason why the strike is going on.

The Government and Excise department have already put ads in various newspapers with the agreed upon points. The Government has agreed to all the demands by the industry except roll back of excise.

But few people with vested interests will never tell the members of his organisation the following points,

1: All Manufacturing Units with Small Artisans/Karigars who do work on Job Work basis are out of Excise duty.

2: All Retailers who do trading of jewellery are out of excise duty.

3: All wholesalers who do trading of jewellery are out of excise duty.

4: Jewellers who manufacture jewellery by  purchasing bullion and giving work to Karigar are under excise duty when their turnover is above 6 crs (Nearly 20 kgs) yearly.

5: No bullion merchant is under excise duty.

6: More than 80 % industry today is out of excise duty. No one is aware of reality, but is on strike!

A FAQ sheet can be viewed here http://gjf.in/excise_faq.php

In all this, an honest jewellery manufacturer is suffering. He has no clients to sell his goods to and mounting losses due to operational costs. This will in turn trigger a mass lay off of artisans and thus increasing unemployment.

Also, many Vijay Mallyas will come to light within a few months if the strike continues.

I request all the Jewellery organisation heads to rethink their decision and call off the strike. The Government has agreed to most of the demands and there is no reason to fall prey to politics and thus destroy livelihood of many small workers.

– written by @Marwaari


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