01 April 2012

Jewellery tax may be rolled back -http://www.mydigitalfc.com

Jewellery tax may be rolled back

By KR Sudhaman Mar 27 2012 , New Delhi

Finance minister Pranab Mukherjee on Tuesday hinted at rollback of the one per cent hike in excise duty on unbranded jewellery imposed in the Union budget for 2012-13 in the face of nation-wide protest by goldsmiths.

However, Mukherjee ruled out withdrawal of the 2 per cent hike in import duty on gold and platinum, which was imposed to curb import of unusually large quantities of the yellow metal, contributing substantially to the burgeoning current account deficit at 3.6 per cent of the gross domestic product (GDP).

Winding up the general discussion on budget in Lok Sabha, the finance minister said he would also reconsider the proposal to make the use of PAN card mandatory for purchase of jewellery worth over Rs 2,00,000.

“I understand the plight of small jewellers... I am considering it. During the period that will be available from now and (the passage of) the Finance Bill, I will come out with an acceptable formulation,” Mukherjee said.

Not impressed by the assurance, Gems and Jewellery Traders’ Federation chairman Bacchraj Bamalwa said the jewellers would intensify their strike and continue it till the excise duty on unbranded jewellery and gold items is withdrawn completely.

The traders have been on strike since March 17. “The finance minister said he would consider it. But he also talked about an alternate formula. We will have to wait and see what the government comes up with,” Bamalwa said.

In the Union budget, the finance minister had proposed to levy one per cent excise duty on unbranded jewellery on par with branded jewellery.

On the demand for rollback of import duty on gold, which was raised to 4 per cent from 2 per cent, Mukherjee said: “I know it (gold) is part of our culture” but the import of the ‘dead asset’ results in wastage of the country’s precious foreign exchange.

India imported gold worth $46 billion 2011-12, up from $33 billion in the previous year.

Mukherjee did not agree with former finance minister Yashwant Sinha’s contention that the budget proposals would deepen the vicious circle of inflation, widen fiscal deficit and lead to a drop in investment and growth.

Mukherjee said he made attempts to push investments in infrastructure and took drastic measures to cut subsidies, apart from unveiling a roadmap for fiscal consolidation and to move into a higher growth path.

He made it clear that there was no room for fiscal profligacy and all attempts would be made to keep deficit at the budgeted level of 5.1 per cent of GDP, while subsidies would be capped at 2 per cent of GDP. “The deficit target is pragmatic and conservative and contained no hidden figures,” Mukherjee said.

He attributed the difficult economic situation to the global crisis, particularly the euro zone situation, and said that’s why the budget strived to push domestic demand in order to drive growth. India’s exports have done reasonably well despite the euro zone crisis and the slowdown in the US because of diversification of markets with Asean and East Asia, which now account for 60 per cent of total exports.

To Sinha’s claim that the NDA government had reined in inflation better, Mukherjee said during that five-year period, global crude oil prices ranged $12-32. In 2011-12, it had averaged around $115.

“With 80 per cent of the country’s oil requirement and most of the fertiliser requirements, other than urea, being import, this issue needed to be addressed collectively,” he said.

On the demand by states for the continuation of central sales tax, Mukherjee said he had an ‘open mind’ and that he had no intention to alter the federal structure. He appealed to the opposition parties and states to cooperate in the early implementation of the Goods and Services Tax.

source: http://www.mydigitalfc.com/economy/jewellery-tax-may-be-rolled-back-179
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