Finance minister (FM) Pranab Mukherjee buckled under pressure from two powerful trade lobbies - jewellers and realtors - while dropping proposals put forward by him, ostensibly to check circulation of black money in the economy.
Apart from black money, he has also decided to hold back the shift towards a goods and service tax regime and announced a withdrawal of 1% excise duty on all precious metal jewellery, branded or unbranded, after nation-wide strike from industry bodies.
Following the changes announced on yesterday (May 07, 2012), you will no longer be required to deduct 1% of the transaction value at the time of purchase of property.
Similarly, for cash purchase of jewellery, the minister has increased the threshold for tax collection at source from Rs2 lakh proposed by him on March 16 to Rs5 lakh now. The TCS threshold for cash purchase of bullion, excluding coin or any item weighing 10 grams or less, has, however,been retained at Rs2 lakh.
The announcements received unanimous acceptance from jewellery makers, who had been opposing the move since it was proposed in the Budget. 'This is a great announcement. The implementation of the excise duty, especially, would have been practically impossible to manage as it is impossible for jewellers to track where a piece of jewellery has been manufactured,' said Mehul Choksi, CMD of Gitanjali Gems.
The move follows a 21-day strike by jewellers across the country in March this year, after the FM had proposed a 1% excise duty on unbranded jewellery and a 1% tax on all purchases exceeding Rs2 lakh in the Budget.
According to the government, the move was intended to streamline excise duty that had already been levied on branded jewellery in March 2011. Post the strike, the FM had met jewellery associations in early April giving them an assurance that the excise duty would be rolled back.
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Apart from black money, he has also decided to hold back the shift towards a goods and service tax regime and announced a withdrawal of 1% excise duty on all precious metal jewellery, branded or unbranded, after nation-wide strike from industry bodies.
Following the changes announced on yesterday (May 07, 2012), you will no longer be required to deduct 1% of the transaction value at the time of purchase of property.
Similarly, for cash purchase of jewellery, the minister has increased the threshold for tax collection at source from Rs2 lakh proposed by him on March 16 to Rs5 lakh now. The TCS threshold for cash purchase of bullion, excluding coin or any item weighing 10 grams or less, has, however,been retained at Rs2 lakh.
The announcements received unanimous acceptance from jewellery makers, who had been opposing the move since it was proposed in the Budget. 'This is a great announcement. The implementation of the excise duty, especially, would have been practically impossible to manage as it is impossible for jewellers to track where a piece of jewellery has been manufactured,' said Mehul Choksi, CMD of Gitanjali Gems.
The move follows a 21-day strike by jewellers across the country in March this year, after the FM had proposed a 1% excise duty on unbranded jewellery and a 1% tax on all purchases exceeding Rs2 lakh in the Budget.
According to the government, the move was intended to streamline excise duty that had already been levied on branded jewellery in March 2011. Post the strike, the FM had met jewellery associations in early April giving them an assurance that the excise duty would be rolled back.
....more info