In a move to protest against the 1% increase of excise duty on jewellry, the jewelers and bullion’s strikes is continued on 11th Day throughout the country including Delhi and Mumbai and now, Delhi will observe ‘bandh’ on 17th March for the same cause in support of the jeweller. It has witnessed a loss of about Rs 60,000 crores and now the Jewellers demanding roll back of the proposed excise duty on non-silver jewellery items.
About 5 crores labourers are sitting without work at home. The jewellers have two issues- one they are not willing to admit in bringing their business into the excise net, and second they have issues with the slab for Tax Collected at Source (TCS).
When we tries to know the silence over the whole issue. We come with a typical reply that jewelry industry thrives on black money so wanted to avoid the tax, that’s all. No, that’s not all but there are other issues concerning the jewellery business.
As we all know, India import its’ most of the gold so jewellers and the traders need to pay high custom duties, income tax and VAT as well.
So why the government has imposed 1% Excise? Why they are saying that we are actually willing to pay, but increment duty by 1% but don’t introduce excise.
Excise Tax Alarms
Excise Tax is governed by the scary Inspector Raj. Excise is often applied on manufacturing industries which produce materials in factories and then sell it in bulk. But the jewellery industry in India is quite different, its’ like a home cottage handicrafts industry where most karigars (craftsmen) work from the homes.
The Excise Tax will be applied only on those units that have 12 crore turnover, is rather mis-fact or mislead because a small jeweller may have a 12 crore turnover, but he is not running one single factory. But everyone needs to maintain the excise paperwork as they contribute to his turnover.
It is nearly impossible for small jewellers to do the paperwork. Most of these craftsmen are illiterate, they have low incomes. Those people can’t hire professionals to maintain the paperwork for each small work job, like say re-shaping the ring and fixing the stone back.
Speculate the Scenario
Imagine you have diamond jewellery and you wanted to loose it. The jeweller will have to do paperwork on accepting the ring from you. Then he will give to a karigar and will have to do paperwork with the karigar. The craftsman will probably fix it in 10 minutes. When he returns it to the jeweller, he will have to do new paperwork. The jeweller will then return it to you and again do paperwork. All this paperwork for a transaction probably worth 20 minutes and Rs 250 !
Since this exchange is part of the annual 12 crore budget of the jeweller the paperwork is mandatory. Can you imagine how such transactions are done by jewellers?
If there is a failure of any of these Rs 200 worth transactions, then the excise inspectors can raid the jeweller and seize his business! What is the result going to be? Firstly the jewellers will avoid all small transactions which can affect you – the middle class customer.
Secondly, the jeweller will need to hire professional person to do the paperwork for which one will can’t pay from his own saving and you – the average customer will foot the bill for the excise paperwork. Lastly, the jeweller who gets stuck in a invasion or raid, will definitely try to bribe in his way through to stop his business from being closed and they will need to pay the bribe money and it no wonder to guess that it will be you again – the middle class customer.
So increase of excise duty may serves the following 3 purposes – it makes jewellery more costly for the common people, it makes 5 crore small craftsman, ofcourse many of them will be illiterate, will force to run for paper work, and it opens an opportunity for excise inspectors to enjoy the breads of corruption.
If the poor farmer who have taken a loan for his daughter’s marriage may failed to pay the amount and forced to further consequences. When will the India change this double-standard revenue system where two-third of the revenue generated from indirect taxes and rest one-third taxes generate from the direct taxes by the rich people.
Definitely the time has come that Finance Ministry re-think over the whole issues concerning the increase of excise duty so that business may re-store back to normal platform otherwise the indefinite strike by the jeweler may continue.
