New rules to offer relief on excise norms to jewellers soon.

NEW DELHI: The finance ministry will soon announce fresh rules for the levy of excise duty on unbranded jewellery to provide some relief to the country's lakhs of agitating jewellers.

Finance minister Pranab Mukherjee had announced a 1% excise levy on unbranded jewellery in the March 16 budget for 2012-13, triggering an immediate protest from the retailers.

"A detailed circular on the duty framework is under worksa¦It will be issued in a few days," a ministry official told ET.

Small jewellers and goldsmiths will not be required pay excise duty or register with the central excise authorities even if they manufacture for a large jeweller, as per the circular under works at the Central Board of Excise and Customs (CBEC), country's top indirect taxes body, under the finance ministry

The CBEC has held discussions with several jewellery associations protesting the 1% excise duty to arrive at a mutually acceptable solution.

An excise duty exemption available for small manufacturers having a turnover of Rs 5 crore is already available. But, there are apprehensions in the industry that due to its unique nature all small goldsmiths working for a large producer or retailer will have to pay excise duty or register with it causing them unnecessary hardship.

The official said as per the new norms under consideration even a large manufacturer will need to register only one premise and will be exempted from keeping any additional records.

"The record maintained for state taxation department such as normal business registers and invoices would suffice," the official said.

State governments already levy VAT on jewellery and all traders above a turnover limit of Rs 10 lakh are liable to pay the tax.

The move comes after finance minister Pranab Mukherjee's promised to come out with an "acceptable formulation" soon for the levy in his reply to the debate on general budget in Parliament.

The finance ministry has already limited the duty impact by imposing it only on the 30% value of the good.

The official said the effective excise duty on jewellery could be in the range of Rs 90 per 10 grams.

The new circular is expected give some relief to bullion traders who argue that their industry had been singled out.

"The finance minister has singled out the gems and Jewellery sector with a barrage of provisions that is set to hamper the functioning of the trade," said Rakesh Saraf, President of Delhi's Karol Bagh Jewellers Association.

Bullion traders have been unhappy over the imposition of excise duty, increase in customs duty on gold and an additional tax of 1% on cash sale above Rs 2 lakh.

The excise duty on branded jewellery was largely aimed at preventing tens of crores of revenue loss to the exchequer after most branded jewellery makers starting selling jewellery without any brand name to circumvent excise duty.

Other measures such as increase in customs duty were aimed at checking imports.

India is the world's biggest consumer of the yellow metal, with an annual consumption of over 900 tonnes.

The country's import bill in the last fiscal stood at $46 billion, nearly equivalent to its current account deficit, prompting policymakers to take measures to curb its import.

Source : economictimes.indiatimes.com