Budget Provisions
An import duty structure of 'Nil basic customs duty, CVD of Rs 140 per 10 gram and Nil SAD is being prescribed for gold dore bars having gold content not exceeding 80 per cent, imported for refining and manufacturing serially numbered gold bars in India.
The Finance Minister has withdrawn excise exemption on 130 items and a nominal central excise duty of 1 per cent is being levied on these 130 items that are mainly in nature of consumer goods.
The Concessional excise duty of 1 per cent without CENVAT credit facility is being imposed on (a) Articles of jewellery manufactured or sold under a brand name (b) Branded articles of gold, silver, platinum, palladium, rhodium, iridium, osmium or ruthenium.
On the other hand, this levy would not apply to precious metals and stones.
Excise duty is being reduced on serially numbered gold bars, other than tola bars, made starting from the ore/concentrate stage in the same factory from Rs 280 per 10 grams to Rs 200 per 10 grams.
A concessional excise duty rate of Rs 200 per 10 grams is being extended to serially numbered gold bars manufactured by refining of gold dore bar also.
Excise duty of Rs 300 per 10 gram is being imposed on serially numbered gold bars, other than tola bars, and gold coins manufactured during the process of copper smelting.
Excise duty of Rs 1,500 per Kg is being imposed on silver manufactured during gold refining starting from ore/concentrate stage or from gold dore bar or during the process of copper smelting.
Proposed to introduce DTC w.e.f 1 April 2011.
Reduced surcharge on domestic companies from 7.5 per cent to 5 per cent.
On the other hand, Increase rate of MAT (Minimum Alternate tax) from 18 per cent to 18.5 per cent.
Budget ImpactImposition of 1 per cent excise duty on branded Jewellery is a negative impact for the Gem and Jewellery Industry, although the industry has been reporting healthy financial results.
This move will increase the prices of branded jewellery when the raw material prices of the precious metals and stones are hardening.
If the demand gets sluggish, this may also impact the financials of the leading branded jewellery companies like Titan Industries (Tanisqh), Gitanjali Gems and Shree Ganesh Jewellery House.
Overall increase in the MAT to 18.5 per cent will have a negative impact on financials of the companies.
Companies to watchGitanjali Gems, Titan Industries, Rajesh Exports, Shree Ganesh Jewellery House.
Outlook
The Industry was expecting government to provide tax relief which was not addressed in Union Budget.
The levy of 1 per cent excise duty on branded jewellery will hurt the industry on the back of spike in the gold, silver, diamond prices and reduce their margins.
An import duty structure of 'Nil basic customs duty, CVD of Rs 140 per 10 gram and Nil SAD is being prescribed for gold dore bars having gold content not exceeding 80 per cent, imported for refining and manufacturing serially numbered gold bars in India.
