Mr. Anantha Padmanaban, Chairman, All India Gem & Jewellery Domestic Council said, “This Budget definitely has few positives like a new simplified GST return form, which is being introduced from April 1, 2020 and Vivaad se Vishwas. GJC welcomes Factor Regulation Act 2011 to be amended to enable NBFCs to extend invoice financing to the MSMEs through TReDS. The Finance Minister’s intent to reduce the compliance burden on small MSME retailers, traders, shopkeepers and the raising of the turnover threshold for audit from the existing Rs. 1 crore to Rs. 5 crore is positive for jewellery businesses. The theme of Wealth Creation, Aspirational India and Economic Development as well as incentives for MSMEs, start-ups and rural agri communities will hopefully encourage more jewellery-buying. India’s 5,000-year old gem & jewellery tradition should be part of the Indian Institute of Heritage & Conservation and the tourism related incentives. At the same time it has disappointed lakhs of jewellers and craftsmen since there was no mention of gold or jewellery in the Budget speech. The gem & jewellery sector is waiting for reduction in import duties on gold, which is the basic raw material for jewellers.”
Mr. Shaankar Sen, Vice-Chairman, All India Gem & Jewellery Domestic Council said, “The new personal income tax regime has estimated revenue forgone of Rs. 40,000 crore per year. Even if half of this amount is spent then it’s likely to improve the consumption cycle. Raising of the threshold for audit for MSMEs will help spur entrepreneurship in the country and simplified GST return is also positive. Similar to the suggestions put forward in the Economic Survey of ‘Assemble-in-India’, we strongly propose that the government make ‘Handcrafting-in-India’ a slogan for the gems and jewelry sector.”
For Gems & Jewellery Industry, 2019 – 20
Key highlights of Gems & Jewellery Industry
We on behalf of Gems & Jewellery domestic sector wish to submit the following points
· The Gem & Jewellery industry is predominantly hand crafted and labour intensive.
· Over 1 crore skilled labour force is engaged in manufacturing of jewellery in the domestic sector.
· Indian households own approximately 22,000 ton of gold.
· Around 600 ton of gold is used in jewellery.
· Gold is also viewed as a safe, secure and a time-tested investment.
Under the backdrop of Industry’s highlights and PM Narendra Modi’s dream project “Make In India & Skill Development” GJC would like to recommend the following points for your kind consideration in the union budget 2019-20
1. Reduction in Import Duty on Gold
a. The 10% Import Duty on gold was levied to curb Current Account Deficit. However, India’s trade deficit narrowed to 2.5% of GDP in 2019.
b. Over the past, Commerce Ministry has many times suggested to reduce the Gold Custom Duty
c. Reduction in the gold duty will directly reduce other social & economic menace in the country.
2. Credit Card commission levied by banks
The use of non-cash transaction has been on a rise due to technological development and access to various banking facilities across the nation. However, in retail sales to customers, Banks charges commission of approx. 1 – 1.5% whenever the credit card is swiped. We hereby suggest the Govt. to waive off the bank commission or reduce it to 0.20% thus ensuring a good boost to the ‘Digital India’ for the G & J Industry.
3. Relief from Capital Gain Tax
In case of remaking of new jewellery from old jewellery or old gold, GST is applicable @18% on labour charges. Due to high rate of GST, the customers are reluctant to go for this option.
4. Cash purchase limit – Change in Section 40A of the Income Tax Act
Currently, the monetary limit on revenue expenditure or purchase limit in cash is Rs. 10,000 per day. To provisions contained in Section 40A of the Income tax Act, a jeweller is unable to make payment above Rs. 10000/- in cash. Keeping in mind the hardships faced by the common man during such crisis, we urge that the limit of Rs. 10,000/- per day be increased to Rs. 1,00,000/- per day
5. Bank finance to small & medium scale jewellers
After the few wrong incidents in the banking industry the gems & jewellery sector has been completely deprived of finances by Banks. As, the G & J Industry is prominently represented by small & medium scale jewelers. This sector has been badly hit and fighting for its survival.
6. EMI for 22 ct. Gold Jewellery
a. Currently, loans on purchase of jewellery is being treated as Personal Loans, where the rate of interest is very high. EMI should be available for purchase of jewellery and restriction should continue only for bullion and coins. This will help the industry to move towards organized and compliant business practices.
b. Even the Finance Minister in the 2018 Budget has announced as an Asset Class. Hence, we urge that the facility of EMI should be extended to the Gems & Jewellery industry which in turn shall lead to substantial growth of the business of the industry
7. NEFT / RTGS on public holidays and Sundays
In the recent past, it has been observed that more transactions are happening online. Also, most of the buying takes place on Sundays and public holidays where Banking channels like NEFT / RTGS are not available. We urge that the same should be available on holidays and Sundays when there is maximum buying by the customers.
8. Gold Monetization Scheme
The Gold Monetisation Scheme (GMS) was introduced by the Honourable Prime Minster 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. – the idea being to mobilise domestic gold to be channelized for productive use in the system. However, the total deposits accumulated by the banks under the GMS are 11.1 tonnes, which is a meagre 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. In such a scenario, it becomes imperative to understand the reason for the non-participation in the GMS.
9. Ashoka Chakra Gold coins
The Ashoka Chakra Gold coins launched by Honorable PM is a pride to our nation. We request the Govt. to enable jewellers to sell these Gold coins through their retail stores. This will increase the reach and generate more sales of the coins.
10. Increase of PAN card limit
India is a country with strong traditional values. Every household during the weddings gifts the gold jewellery to their children as a blessing. A mangalsutra, four pieces of bangles, a small nose pin along with rings for bride and groom weighs more than 100gms which itself costs around 3 to 4 lakh rupees. We recommend raising PAN card limit from 2 lakh to 5 lakh rupees.
11. Other Important Suggestions
a. The tax rate for Body Corporate with annual revenue of less than Rs.250 crore a year was reduced to 25% from 30% in the last Budget. A majority of the players in the Gems & Jewellery Industry are either Partnership (Including LLP) or Proprietorship firms. We therfore, urge the Government to extend the benefit of reduced Income tax rate to even Partnership (Including LLP) or Proprietorship firms. This will help the industry to move towards organized and compliant business practices.
b. In order to promote manufacturing in this sector and support ‘Make in India’ initiative of Government of India, jewellery manufacturing machines import duty should be 0%.