Indian gem and jewellery industry asks for reforms in Direct Tax code

Some suggestions on modifying provisions in the Indian Direct Tax code such as search and seizure and tax on gross assets, and incentivising units in SEZs and EOUs, were presented by the Indian gem and jewellery industry to the Indian Government. The industry believes that such provisions are pulling back growth from the industry, which has only just begun getting back on its feet after the economic slowdown, reports say.

The search and seizure provision could cause harm, due to the unique characteristics of stock-in-trade, reports say. It may result in loss of exports and defaults in fulfilling order deadlines. The Gem and Jewellery Export Promotion Council of India (GJEPC) suggested that as stock is purchased on bank loans, the stock should be inventorised and not seized. The recommendation was sent to the Finance Minister, Mr Pranab Mukherjee, and the Commerce Ministry.

The industry’s recommendation on the issue of taxes suggested that tax should not be levied based on value of assets of the company, and there should be a provision for credit of tax paid on value of assets to set-off tax payable in subsequent years, reports say. It also suggested continuation of the tax incentives in SEZ and EOUs and provision of objective parameters to enable rule based determinations of residential status of foreign companies.

The Indian gem and jewellery industry saw a 2 percent increase in exports in September valuing USD 2.56 billion, which was after a long gap of 11 months, reports say. According to the GJEPC, manufacturing still should a dip of 30 percent; trading is however on the rise.

Courtesy: Business Line