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1% tax on gold jewellery withdrawn by department

In Budget FY 2017, FM Arun Jaitley has announced 1% TCS levy on cash transactions over Rs 2 lakh to buy gold jewellery. Now, the government has rolled back the Budget decision of charging 1% tax collection at source (TCS) on cash purchases of gold worth over Rs 2 lakh much to the relief of potential customers and jewelers. TCS will now again be applicable for cash transactions over Rs 5 lakh, like earlier.

1% tax on gold jewellery withdrawn by department

 

This measure of levying 1 % TCS was one among the many significant measures taken by the Govt this year to curb and trace black money. While the idea seems noble, no one can deny that an additional tax would heavily impact the already falling gold market.

Harping along this tune, the jewellers also claimed that this will only deter sale of gold in an already falling season. Coupled with the levy of 1% excise duty on gold and diamond jewellery, this move came as a big disappointment for the jewellers. In order to voice their grievances, jewellers nationwide went on a strike. They shut their shops and this strike lasted for 45 days.

In such situations, the decision of the Govt to roll back this TCS came as a relief. Commenting on the government’s decision, Bachhraj Bamalwa, Director, All India Gem & Jewellery Trade Federation (GJF) was quoted in a report by The Economic Times saying that the decision was a huge relief for those looking to buy wedding jewellery as Rs 2 lakh is a very small amount.

Gold demand in the country has been faltering for some time now. First it was the high prices that kept buyers at bay and then it was the imposition of the 1% excise duty on non-silver jewellery. In fact, this year, demand for gold was dismal even on Akshaya Tritiya which is considered to be auspicious for buying gold as it fell in the middle of the jewellers’ strike.

Source: DNA India

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