Govt refuses to recall 1% excise duty on jewellery

Finance Minister Arun Jaitley refuted the allegations saying when items of common use were being taxed, how could luxury items be kept out.

The government on Thursday refused to budge from its stance on levying one per cent 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 Samajwadi Party.

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.

Asserting that there was absolutely no harassment of artisans, Jaitley said corporate jewellers with up to Rs 12 crore turnover last year and up to Rs 6 crore turnover in this fiscal were 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 charged the government of killing the traditional jewellery trade and promoting the big brands by imposing the levy and later Congress and SP members walked out of the House.

The jewellers have been on a nationwide strike for over 40 days to protest the levy.

Jaitley said even imitation jewellery attracted 6 per cent 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 per cent VAT removed in Kerala.

"Each state imposes VAT on gold and in Kerala it is as high as 5 per cent 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 recalled it in 2009 in the face of stiff opposition. It had again imposed tax in 2012 but recalled it later.