Government today reimposed 1 per cent excise duty on gold jewellery after a gap of four years in a bid to curb demand, which the industry said would make objects costlier and impact their business.
In Budget 2016-17, Finance Minister Arun Jaitley imposed 1 per cent excise duty (without CENVAT credit) or 12.5 per cent (with CENVAT credit) on articles of gold jewellery.
Silver jewellery, other than studded with diamonds or other precious stones namely, ruby, emerald and sapphire have been excluded from the excise duty.
That apart, excise duty on refined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate, increased to 9.5 per cent from 9 per cent.
Similarly, excise duty on refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar -- has been increased to 8.5 per cent from 8 per cent.
Prospectively, the excise duty exemption under the existing area based exemptions on refined gold silver is being withdrawn, the budget document said.
The government has also increased countervailing duty (CVD) on gold dore bars to 8.75 per cent from 8 per cent. CVD on silver dore raised to 7.75 per cent from 7 per cent.
The import duty on imitation jewellery has also increased to 15 per cent from the existing 10 per cent.
Reacting to the development, World Gold Council (WGC) India MD Somasundaram PR said, "Reintroduction of a 1 per cent excise duty on the manufacture of jewellery is inconsistent. It will make jewellery buying more expensive and could lead to irregular business practices."
Additionally, raising import duty on gold dore could hinder
growth of the domestic gold refining industry, he added.
"Consumers will have to shell out more for gold and diamond jewellery as the Budget has imposed 1 per cent excise duty, which comes as a blow to the gems and jewellery sector. Introduction of 1 per cent excise duty will lead to excise raj in the country and harassment to the trade." VelvetCase.Com Chief Operating Officer Runit Shah said.
At present, there is 10 per cent duty on import on gold. India is the world's largest gold jewellery consumer. The country imports around 900 tonnes of gold annually.
