CA Lalit Munoyat

Latest on excise duty on Articles of Jewellery

Excerpts of the speech of Finance Minister Arun Jaitley

Thursday 28 April 2016 in Rajya Sabha

1. Jewellers will have to pay one per cent excise duty on gold.

2. Excise duty on gold jewellery will have to be paid, but the jewellers can suggest any other safeguard they want against harassment,

3. The gold traders will file return the way they do, by self certification. There will be no physical checks for paying excise. Whatever the rate at which they are paying VAT (one per cent), the same rate they have to pay excise duty,

4. I have told the trade bodies to bring to my notice if there is any harassment. CBEC (Central Board of Excise and Customs) has also informed the traders regarding the same,

5. We have to convince the country that luxury items cannot be kept outside the tax net. Else we will have to increase the duty on essential items to maintain 18 per cent of GST,

6. If we are going towards GST, the first step is to put taxation on luxury item. No political party can demand to keep the luxury item outside tax net, and also maintain 18 per cent taxation. Because it can never be achieved,

7. We have extended the date for registration by two months. By that time the Lahiri committee report will also be out,

8. Customs duty cannot be raised further. Service tax is not applicable on gold. So, what remains as an option is excise,

9. It is a matter of time. As soon as Congress supports and GST comes into place, VAT and excise will be merged.

Synopsis of Debate on the subject held in Rajya Sabha on 28th April 2016 is as follows :-


Imposition of Central Excise Duty on the Gold Jewellery by the Government leading to Resentment among Jewellers in the Country

SHRI RAJ BABBAR: I call the attention of the Finance Minister to imposition of Central Excise Duty on the gold jewellery by the Government leading to resentment among jewellers in the country.

THE MINISTER OF FINANCE, THE MINISTER OF CORPORATE AFFAIRS AND THE MINISTER OF INFORMATION AND BROADCASTING (SHRI ARUN JAITLEY), replying to the points raised by the Members, said: : Hon’ble Deputy Chairman, this issue has been raised by Raj Babbar ji and some other Hon’ble Members. Several public debates have also taken place on this issue for the past some weeks. I have also had talks with the people associated with this business. I have got an opportunity to understand their grievances as well. A plea was given that bigger ones were exempted while smaller ones were taxed. But the fact is quite contrary to this. This excise duty has not been imposed on any small jeweler. According to the exemptions provided, if the turnover of anyone during the last year was under 12 crore rupees and is less than 6 crore rupees in the next year, he is exempted. I would like to clarify that it will be enforced upon the traders having turnover of 12 crores and 6 crores of rupees and not on lower category of traders. We can decide the items which can be taxed. It is not possible to recall the tax due to some organised agitation. The State of Kerala is on the top in the list of the states which have taxed the gold by imposing 5 percent tax and the same books have to be maintained for VAT. Imitation jewellery is taxed at 6 per cent excise in this country. When the small items are being taxed in the country, then there is no reason that a luxury item should be kept outside the tax net. If we are moving towards the GST, gold has to be taxed. GST council will decide the tax rate, but the main issue is whether the upper cap should be within the constitution or outside of it. If you want to have luxury items out of GST, then you will have to enhance the duty on essential items to maintain the 18 percent cap. It is not possible to keep luxury items out of taxation indefinitely. We can maintain a reasonable cap by taxing these items. Keeping in view the various features of the gold trade, no physical verification will be done by any authority. You have to pay the tax on self certification. We are also ready to extend more facilities for avoiding any type of harassment of the traders.

We have formed a committee in which three nominees are to be from the trader’s side. 206 traders have registered themselves till date and we have also extended the registration date. After registration, a trader will file his return after self-certification and then only rate of excise duty will be decided, likely to be same as VAT. There are not so much of gold in the country. Therefore, the bigger the ban on import, the higher is the smuggling. Now, a small man can import the gold, which is having 10 percent custom duty. The centre has no other option but to impose excise tax. As and when GST is implemented, VAT imposed by the States and central excise will be merged. Then, they have to pay tax on all items, including the luxury items. I would also like to condemn the wrong propaganda in this regard and assure you that small traders will be out of its ambit.

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