GJC urge govt to reduce GST rate, increase PAN card limit to Rs 5 lakh in Budget 2022

All India Gem & Jewellery Domestic Council (GJC), the apex body of gems and jewellery industry, has sought to reduce the GST rate on jewellery to 1.25 per cent from 3 per cent now in the upcoming budget. GJC has also urged FM to raise the PAN card limit from Rs 2 lakh to Rs 5 lakh citing that many households in rural India do not hold PAN cards and face difficulty in arranging minimum required jewellery in times of need especially post-pandemic.

The council said that post the impact of Covid’s first and second wave in 2020 and 2021 respectively, the gems and jewellery industry was on the recovery route. However, the fear of the new virus variant Omicron looms large and there are talks of restrictions and additional curbs. India’s gem and jewellery business allied businesses continue to suffer and face the brunt of the pandemic for nearly two years now. Business has been slack due to lockdowns and curbs on retail sector; customers are not spending much on jewellery; and the MSME jewellers, craftsmen and artisans, who comprise the bulk of the indigenous industry, are not able to claim any respite or relaxation in spite of their growing woes and stress.

GJC has urged the government that suitable clarification be issued on the minimum quantity of gold, which an individual can deposit under the Gold Monetisation Scheme (GMS), without being questioned by any departmental authorities. GJC has also requested that the EMI facility for purchase of 22K gold jewellery should be allowed to the gems and jewellery industry which in turn shall lead to substantial growth of the business of the industry post pandemic.

Ashish Pethe, chairman GJC, said, “Our industry has suffered a lot during these harsh times of the pandemic, and it is also identified as one of the ‘stressed sectors’ in K V Kamath’s report. Hence, GJC has proposed changes in Section 40A of the Income Tax Act so that the existing daily cash limit of Rs 10,000 per day be increased to Rs 1 lakh per day. GJC has also urged the government to waive off the bank commission (1-1.5%) on purchase of jewellery through credit cards.”

GJC urged the government that in case jewellery sold is reinvested in new jewellery, the exemption from Capital Gain as per Section 54F of the Income Tax Act 1961 should be extended to gems & jewellery Industry. This will help the industry to move towards organized and compliant business practices, said GJC.

GJC has sought a cumulative GST rate of 1.25%, based on Revenue Equivalence Principle on gold, precious metals, gems, and articles of jewellery made of such goods. Earlier, jewellery was subject to excise duty of 1% (without Input credit) or 12.5% (with input credit). However, jewellery was subject to excise duty only if the total turnover crossed the threshold limit of Rs. 10 crore. Accordingly, a very small segment of the industry (approximately 15% to 20%) was subject to excise duty on. Further, the jewellery was subject to 1% Value Added Tax (VAT) in almost all states (except Meghalaya, Kerala and Tripura). Hence, the effective tax on indigenously manufactured gems and jewellery articles for the majority of the players was 1% or at the most 2%.

The Gold Monetisation Scheme (GMS) was introduced in 2015 to turn gold holdings into an earning asset by allowing residents to deposit physical gold bars, coins or jewellery into a Gold Savings Account. However, the total deposits accumulated by the banks under the GMS are around 11.1 tonnes, which is a meager number as compared to the estimated holdings of 23,000-24000 tonnes. Also, making the GMS more effective is important to address the widening current account deficit (CAD) issue. GJC said that the government must clearly give exemptions to households for minimum 500 grams of gold deposited, being of ancestral nature, from questioning by any tax department. The same will make GMS more effective and benefit the government and participants at large, said GJC.

Courtesy: Economic Times