As jewellery shops across India remained shut for a third day to oppose levy of excise duty, the government today went into damage control, clarifying that the 1 per cent levy on non-silver articles would be only for jewellers with Rs 12 crore turnover and not small traders.
Meanwhile, stepping up pressure, jewellery traders have decided to extend their strike till March 7, saying the new duty will not just hit business during slowdown but also put a significant compliance burden on the industry, which has been weighed down by the import duty and a value-added tax.
Finance Ministry issued a statement to clarify that Budget 2016-17 has proposed a nominal excise duty of 1 per cent (without input tax credit) and 12.5 per cent (with input tax credit) on articles of jewellery.
“Even for this nominal 1 per cent excise duty, manufacturers are allowed to take credit of input services, which can be utilised for payment of duty on jewellery,” it said.
Finance Ministry said central excise officers have been directed not to visit the premises of jewellery manufacturers.
It said the Budget provides for excise duty exemption limit of Rs 6 crore in a year for Small Scale Industries in jewellery business (as against normal limit of Rs 1.5 crore).
“Thus, only if the turnover of a jeweller during preceding financial year was more than Rs 12 crore, he will be liable to pay the excise duty,” the statement said.
Jewellers having turnover below Rs 12 crore during preceding financial year will be eligible for exemption up to Rs 6 crore during the fiscal.
“Such small jewellers will be eligible for exemptions up to Rs 50 lakh for the month of March 2016,” it said.
Indirect tax proposals come into effect from the date Budget is presented in Parliament and so the exemption for small jewellers, with turnover of less than Rs 12 crore a year, would be Rs 50 lakh in March.
Articles of silver jewellery (other than those studded with diamonds, ruby, emerald or sapphire) are exempt from this duty.