All India Gems and Jewellery Federation seeks changes in India’s Direct tax Code

The All India Gems and Jewellery Federation (GJF) met with representatives from the Ministry of Finance, to suggest changes in India’s Direct tax Code. The issues being addressed by the GJF pertain to search and seizure provisions, tax on gross assets and the TDS

Tax Deducted at Source

on all payments, terms in the Indian Direct Tax Code. The GJF opines that these three terms are detrimental to the growth of India’s gem and jewellery industry.

The search and seizure provisions command the seizure of entire stock-in-trades if there is any discrepancy noted in raids. Also, there is a 2 percent tax levied on gross assets. The Indian gem and jewellery industry functions on small margins and huge inventory levels, and the present tax terms imply that a company making 2 percent net profit would be required to pay the same tax as a company making 8 percent net profit, which is what GJF is opposing. The 10 percent tax deduction on all gold, diamond, jewellery, etc., is also objectionable to GJF as payments would block working capital for the industry, reports say.

The objections pointed out by the GJF were also filed by over 300,000 manufacturers, wholesalers and retail jewellers in India.

If the recommendations are not applied, the industry would be facing a big block to its growth, as terms like seizure of such stock-in-trade products as jewellery, bullion and precious stones, could make it difficult for assesses since it would result in the cessation of their manufacturing operations and cause harm to business operations.