Impose of 1% of excise duty on gold jewelry by the central government did not go well down with most of the jewelers across the country. In the past few months, we have seen jewelers coming out on the streets, calling the strike to oppose a sudden increase in the excise duty.
However, even after agitating & striking for more than a month, they did not succeed to conciliate government to roll back its decision on excise duty. Finally, after enduring agitation and strike eventually, they called off the strike after one month and went back to the business.
However, they are still making efforts to persuade the Government to roll back its decision. But, the government is adamant not to roll back its decision. Not only the current government; even the previous governments have been trying continuously for a long time to impose excise duty on gold.
The reason behind imposing central excise duty on gold is due to the undying appetite of Indians for gold. The Annual import of 1000 tons of gold in a quarter compelled governments to introduce an excise duty on gold to restrict the import of this commodity.
The Government also wants to mobilize 20000 tons of gold lying idle in households and temples but of no use. To mobilize the gold, some time ago the government of India has launched a gold monetization scheme in a budget to influence Indians to invest in gold bonds and schemes. And, the recent decision of the government to propose excise duty on gold has been seen in the same context.
Let us discuss How Impose Of 1% Excise Duty Has Affected Jewellery Market?
- The first and foremost impact of this policy would be a massive reduction in the import of gold commodity. And, Government of India will save a huge sum of money that it used to spend each year to import gold from the American market.
- The Indian Bullion & Jewellery Association fears that current hike in the excise duty will lead to job loss in the gem & jewelry industry. Due to an upsurge in excise duty jewelers will look up with other ways to cut the cost of jewelry making and this will directly impact on the new job creation in this field.
- The domestic imitation jewelry sector will groom because the Government has increased the basic customs duty on imported imitation jewelry from 10 to 15 percent. And, the recent decision will reduce the import of imitation jewelry in India that will eventually prove beneficial to the domestic imitation jewelry industry.
- The Government of India will receive huge money in terms of tax and enroll plenty of money in its treasury.
Black money circulation, which used to occur through gold brick would stop.
- Small shops will almost vanish after the implementation of this law. Big market players will capture the whole gold and jewelry market. Though, the government has reaffirmed that small jewelers and shop whose turnover is less than 12 crore annually will be exempted from exempted from paying this duty.
Up to now, four months after the implication of this policy; we have seen mixed results of this implication. Some jewelers are in favor of the above increase, whereas; others are suspicious about this policy and their future. Now only the time will tell that what will be the future of this policy and how much it will succeed. We have to wait and watch.