Indian FM Rejects Gold Jewelry Excise Duty U-Turn

(IDEX Online News) – Indian finance minister Arun Jaitley has reiterated his government’s opposition to a rollback of the 1-percent excise duty to be imposed on all-but silver jewelry, according to a report in The Economic Times.

Levied in the February budget, the finance minister said recently that gold jewelry should be considered a luxury item, and therefore, not exempt from government taxation. Jaitley said that gold should attract an excise duty if items such as soap, toothpaste, razors, pencils, ink, fruit juices and baby food also do.

Since the announcement of the levy, the finance minister has come under pressure to rescind the tax, with lawmakers and industry associations and individual jewelers arguing that it will harm trade. Jaitley, however, rejected this assessment, arguing that the excise duty was aimed at large chains with high turnover, not small- and medium-sized enterprises with turnover far below the ~$2 million threshold.

The government decision has proved extremely unpopular, leading in the initial stages, to a 42-day long nationwide jewelry industry strike. A recent three-day strike by bullion traders and jewelers in several parts of the country, including the capital, Delhi, showed that the situation is still a delicate one.

The government formed a committee under former chief economic advisor Ashok Lahiri, to investigate the issues related to the imposition of the jewelry excise duty.