Jewellery sector adds to black money: CBEC

Despite the ongoing jewellers’ strike to protest against reimposition of one per cent excise duty on gold and diamond jewellery, CBEC on Thursday said that the sector contributes to generation of black money and needs to be brought under the tax ambit.

“We have brought jewellery (sector) into the tax net. This is the levy which we had attempted two years ago and withdrawn... This is the sector which you will agree with me needs to be brought into tax needs,” Najib Shah, the chairman of the Central Board of Excise and Customs (CBEC), on Thursday said at an event organised by Assocham.

“This is a sector which lends itself to generation of unaccounted wealth,” he said.

Finance minister Arun Jaitley in the Budget for 2016-17 had proposed one per cent excise duty on jewellery without input credit or 12.5 per cent with input tax credit on jewellery excluding silver other than studded with diamonds and some other precious stones.

Jewellers are on a three-day pan-India strike to protest against the proposed re-introduction of one per cent excise duty on gold and diamond jewellery and mandatory quoting of PAN by consumers for transaction of Rs 2 lakh and above.

“Manufacturing sector contributes 17 per cent of GDP. We have a huge chunk of industry which is out of the tax net,” he added.

The CBEC chairman said the revenue department will take a hit of Rs 1,000 crore due to the change in CENVAT credit rules. “But we thought it is essential because the cost of litigation for you and me are much more than revenue which otherwise we have got.”

Noting that the government has increased some duties, Mr Shah said that it’s done so to create a level-playing field for Indian industries as was the case in defence.

He urged industries to stop demanding exemptions to avail of goods and services tax (GST). “If you want GST, you should not demand exemptions because two don’t go together,” he said.

Mr Shah said Budget 2016-17 aims to bring various sectors under the tax net in an easy manner.

Talking about CENVAT credit rules, he said that more than 10-12 per cent of the litigations were because of two specific rules — Rule 6 and Rule 7, that have now been completely revamped.

“We have tried to simplify them to the maximum extent possible,” Mr Shah said.