Jewellery traders up ante, extend national strike till March 7
As jewellery shops across India remained shut for a third day to oppose levy of excise duty, the government on Friday went into damage control, clarifying that the 1 per cent levy on non-silver articles would be only for jewellers with Rs 12 crore turnover and not small traders.
Meanwhile, stepping up pressure, jewellery traders have decided to extend their strike till March 7, saying the new duty will not just hit business during slowdown but also put a significant compliance burden on the industry, which has been weighed down by the import duty and a value-added tax.
Finance Ministry issued a statement to clarify that Budget 2016-17 has proposed a nominal excise duty of 1 per cent (without input tax credit) and 12.5 per cent (with input tax credit) on articles of jewellery. “Even for this nominal 1 per cent excise duty, manufacturers are allowed to take credit of input services, which can be utilised for payment of duty on jewellery,” it said. Finance Ministry said central excise officers have been directed not to visit the premises of jewellery manufacturers. It said the Budget provides for excise duty exemption limit of Rs 6 crore in a year for Small Scale Industries in jewellery business (as against normal limit of Rs 1.5 crore).
“Thus, only if the turnover of a jeweller during preceding financial year was more than Rs 12 crore, he will be liable to pay the excise duty,” the statement said. Jewellers having turnover below Rs 12 crore during preceding financial year will be eligible for exemption up to Rs 6 crore during the fiscal.
“Such small jewellers will be eligible for exemptions up to Rs 50 lakh for the month of March 2016,” it said. Indirect tax proposals come into effect from the date Budget is presented in Parliament and so the exemption for small jewellers, with turnover of less than Rs 12 crore a year, would be Rs 50 lakh in March. Articles of silver jewellery (other than those studded with diamonds, ruby, emerald or sapphire) are exempt from this duty. Finance Ministry said provisions have been made for easy compliance through use of online application for registration, payment of excise duty and filing of returns, with zero interface with the departmental officers.
“An artisan or goldsmith who only manufactures jewellery on job-work basis is not required to register with the Central Excise, pay duty and file returns, as all these obligations will be on the principal manufacturers,” the statement said. For determination of eligibility for small scale industries exemption for the month of March or fiscal 2016-17, a certificate from a Chartered Accountant, based on the books of accounts for 2014-15 and 2015-16 respectively, would suffice.
Also, facility of Optional Centralised Registration has also been provided. “Thus, there is no need for a jewellery manufacturer to take separate registrations for all his premises,” it said. “Field formations have been directed to grant hassle free registrations, within two working days of submission of the registration application. Further, there will be no post registration physical verification of the premises,” it said.
The statement said jewellers’ private records or records for State VAT or records for Bureau of Indian Standards (in the case of hallmarked jewellery) will be accepted for all Central Excise purposes. Also, there is no requirement to file a stock declaration to the jurisdictional central excise authorities, it said. Excise duty is to be paid on monthly basis and not on each clearance, with first installment of duty payment for the month of March, 2016 to be paid by end of the month. Also, a simplified quarterly return has been prescribed, for duty paying jewellers, it added.
“This sector has remained untaxed. government’s approach is that the whole economic activity should be captured in the system. Knowing the sensitivities, we have gone out of way in making this levy as simple as it could be. The businesses do not have to give a statement of the stocks they have been holding,” CBEC Member Ram Tirath said.