Excise duty: If common items are taxed, how can luxury be exempted, says Arun Jaitley

Government in Rajya Sabha Thursday refused to budge from its stance on levying 1% excise duty on non-silver jewellery saying luxury items cannot be kept out of tax ambit for perpetuity, prompting a walk-out by members of the Congress and SP.

Tearing into the opposition charge that imposition of the levy was killing the trade, Finance Minister Arun Jaitley refuted the allegations saying when items of common use were being taxed, how could luxury items be kept out.

Read more from our special coverage on "JEWELLERY"

• Strike effect: Artisans shift to imitation jewellery
• North-based jewellers await directive from GJF to open shops
• Jewellers continue stir over Budget duty
• Rajesh Exports wins jewellery order worth Rs 1,045 crore
• Rs 6,300 crore business hit in Tamil Nadu, Puducherry due to jewellery strike

Asserting that there was absolutely no harassment of artisans, Jaitley said corporate jewellers with upto Rs 12 crore turnover last year came under its ambit and upto Rs 6 crore turnover in a fiscal later are exempt from it.

"Clearances up to Rs 6 crore in a financial year (if clearances during preceding year were less than Rs 12 crore), are exempt from this duty," Jaitley said, adding "thus small jewellers and artisans are not covered within the ambit of this levy."

Replying to a calling attention on the issue, the Minister said "when there is excise duty on items like soap, toothpaste, razor, pencil, ink, fruit juices and baby food, why should the luxury items be exempted from it."

Opposition members had earlier charged the government of killing the traditional jewellery trade and promoting the big brands by imposing the levy. The jewellers have been on a nationwide strike for over 40 days to protest the levy.

Jaitley said even imitation jewellery attracted 6% excise duty and added that when things used by common people were taxed "how can luxury items be out of its ambit for so long."

He said the opposition should understand that it is a complex subject and when taxes are levied on items like steel, cement and clothes, luxury items cannot be out of its purview.

"We have to decide on which items we will impose excise duty and if there is any structured trade, they do not get the right to resort to agitation against tax," he said and challenged the opposition that if they were so concerned about it, they should get the 5% VAT removed in Kerala.

"Each state imposes VAT on gold and in Kerala it is as high as 5% and if you (opposition) are so much concerned then get it removed from Kerala," he said.

Dismissing charges that excise duty has hit hard small artisans, the Minister said the trade has not developed such that annual turnovers of small jewellers has crossed Rs 6 crore and stressed that "this is implemented on big chains."

Jaitley said the UPA government had imposed taxes on jewellery in 2005 but had recalled it in 2009 in the face of stiff opposition. It again imposed it in 2012 but recalled the same again.