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| Jewellery traders seek changes in DTC provision |
| BS Reporter / Chennai/ Bangalore Feb 06, 2010, 00:43 IST |
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Gems and Jewellery Federation (GJF), the apex industry body for jewellery trade in the country has sought changes in the Search & Seizure provisions of the Direct Taxes Code (DTC) on the grounds that it is penalising to an industry which is already reeling under the effects of global recession. The federation has set up representations to the Ministry of Finance to seek modifications on the same.
C Vinod Hayagriv, chairman, All India Gems and Jewellers Trade Federation said that the GJF objects to three key issues of the DTC namely, Search & Seizure provisions, Tax on Gross Assets and TDS on all payments.
“The seizure of entire stock in trade when there is any difference found during raids is not acceptable. GJF also objects to 2 per cent tax on gross assets since the industry operates on small margins with high inventory levels. In this case a company earning 2 per cent net profit will require to pay the same tax as a company earning 8 per cent net profit,” said Hayagriv.
There are also objections to the deduction of tax at 10 per cent on all payments made for gold, diamonds, jewellery, etc on the grounds that it would result in blockage of working capital for the industry which is facing a major liquidity crunch.
The representation was filed on behalf of the All India Gems and Jewellery Trade Federation (GJF) which consists of over 3,00,000 manufacturers, wholesalers and retail jewellers in India.
Traders said that if the necessary changes were not incorporated in the DTC, it would adverse their sustenance.
“Seizure of stock-in-trade would cause the jewellers to default in their repayment commitments to the suppliers, banks and financial institutions. This would deter the suppliers from dealing with the jewellers and the banks and financial institutions from extending credit facilities to them,” said the representation.
Gem and Jewellery Export Promotion Council (GJEPC) data has shown that the sector has been witnessing a slow revival with exports registering a two per cent increase in September 2009 for the first time in 11 months.
Exports in September yielded $2.56 billion, according Gem and Jewellery Export Promotion Council data.
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