Gems and Jewellery Fedn seeks changes in direct taxes code
Mumbai: Gems and Jewellery Federation (GJF), the national body of the jewellery trade, has urged the Government to modify the direct taxes code (DTC), which may otherwise lead to closure of the jewellery industry within 10 business cycles, a top industry official said.
"GJF strongly objects to three key issues of the DTC-- namely search and seizure provisions, tax on gross assets and TDS on all payments," GJF's Chairman, Ashok Minawala, told reporters here today.
The Association of 3,00,000 manufacturers, wholesalers and retail jewelers has made representations to the Ministry of Finance to seek modifications in the DTC.
GJF objects to the 2 per cent tax on gross assets since the industry operates on small margins with high inventory levels. In this case a company earning 2 per cent net profit will require to pay the same tax as a company earning 8 per cent net profit.
GJF also objects to the deduction of tax at 10 per cent on all payments made for gold, diamonds and jewellery as it would result in blockage of working capital for the industry, which is facing a major liquidity crunch.
Certain schedules proposed in the direct taxes code like search and seizure provisions, tax on gross assets are highly penalising to the industry, which is facing a major liquidity crunch.
The seizure of entire stock in trade, when there is any difference found during raids is not acceptable, Minawala said.
Seizure of stock-in-trade would cause the jewellers to default in their payment commitments to suppliers, banks and financial institutions. This would deter suppliers from dealing with jewellers and banks and financial institutions from extending credit facilities to them, he said.
The domestic gems and jewellery industry is a handmade and handcrafted industry and provides employment to over 1-crore jewelers, sales persons, designers, goldsmiths and craftsmen from small towns and villages from across the country.
The Gems and Jewellery Export Promotion Council (GJEPC) said that the sector has been witnessing a slow revival with exports registering a two per cent increase in September for the first time in 11-months. Exports in September yielded USD 2.56-billion.
The USD 27-billion gems and jewellery sector has been witnessing an upturn since March and it expects export to move up during Christmas, Minawala said.