Excise duty on Gold jewellery Dated 13 th July 2016 http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/do-ltr-jewellrytru1.pdf Relaxation given SSI exemption, the eligibility and exemption limit for manufacturers of articles of jewellery have been revised, as under: Eligibility limit from Rs. 12 Crore to Rs. 15 Crore, and Exemption limit from Rs. 6 crore to Rs. 10 crore. CBEC now has relaxed the rules for its tax on gold jewellery sales that was introduced earlier this year in an attempt to address concerns raised by the industry, the government said in a statement. Jewellers in the world's second biggest gold consumer went on strike for six weeks after the government imposed 1 percent excise duty on gold jewellery from March onwards. To address jewellers concerns the government formed a committee and accepted its recommendation. According to the new rules, jewellers with turnover up to 15 Crore rupees a year will be exempt from the excise duty, the statement said. Earlier, the exemption limit was for jewellers with turnover up to 12 Crore rupees. The government statement also said that in the first two years, government agencies will not audit jewellers that have turnover of less than 1 Crore rupees. Dated 2 nd March 2016 Respected Sir, 1 Issues related to Jewelers Market We, The Association of Jewellers, after central government s announcement to levy excise duty on gold, has called for a strike, for a tenure of 3 days i.e. from 1 st of March to 4 th of March, if this harsh provision is not rolled back, we will go for an indefinite-period of strike to protest on the proposed 1% of excise tax. We want to reveal our situation on this hard provision as proposed in this budget! Jewellers are already struggling slowdown in jewellery market due to gold price fallen down in a dramatic way over the past year! Jewellers are already facing many impractical implementing provision related to TCS collection @ 1% for Jewellery sale exceeding Rs. 5 lacs/ bullion sale exceeding Rs. 2 lacs w.e.f. July 2013. That is an existing challenge for us! From January 2016 onwards, government imposed further hurdle for us, mandated all jewellery retailers to quote of PAN card for the purchase of jewellery worth above Rs.2 lakh. We are asking to the customers to submit the PAN number for each and every transaction. In the market Rs. 2 lacs is a penny amount. Although we are were supposed to getting some relief from this budget but situations became even worst.
Now although inspite of giving some relief the government has imposed excise duty also, on the jewellers who gets it manufactured made from karigar, @ 1% without Input Credit (or 12.5% with Input credit) on the gold/ diamonds jewellery items. This is totally injustice to us! It will impact 90% of jewellery manufactured by small and micro sector and karigars and hence implementation is not at all practical. Recommendation: We are not so much against the amount of tax that is being levied, but the way it is that is, through the excise department. They always take you for task and harass retailers. We are disappointed with the Budget 2016. The proposed 1% excise duty will reduce the ease of doing business as the gems and jewellery sector consists of less educated but highly skilled manpower, who are not equipped to deal with the cumbersome process required for it. Jewellery-making is the third-largest employment generator after agriculture and textile, creating a value addition of over Rs.1 trillion, which is the same as the auto and chemical sector. The threshold limit of SSI exemption upto 1 st clearance of Rs. 6 Crore (i.e. 20 Kilogram per annum or 55 Gram per day very nominal). So manufacturing and exports should be encouraged. The proposal will affect the sector, which is already grappling with challenges after the government's decision to make PAN cards mandatory for any transactions of Rs 2 lakh and above in January. Issue -1 w.e.f. 29 th Feb 2016 Budget 2016 -Introduction of Excise on Jewellery:- Principal manufacturer i.e. jewellers (not a karigar) will be required to get Central Excise registered, pay duty and follow other compliance requirements. Thus, a jewellery manufacturer will be eligible for exemption from excise duty on first clearances upto Rs. 6 Crore during a financial year 2016-17, if his aggregate domestic sales during financial year 2015-16 were less than Rs. 12 crore. For determining the eligibility for availing of the SSI exemption from 2016-17 onwards, a certificate from a Chartered Accountant is sufficient! For the month of March, 2016 for jewellery manufacturers will be Rs.50 lakh, subject to the condition that value of clearances for home consumption from one or more manufacturer from one or more factory or premises of production or manufacture during the financial year 2014-15 should not be more than Rs. 12 crore. What to do immediately:- 1. Prepare Stock statement as on 29 th February: Excisable goods which were produced on or before 29.02.2016, but lying in stock as on 29.02.2016 shall attract excise duty at the time of clearance. However, No stock declaration will be required to be made to the jurisdictional Central excise authorities. 2. Registration once applied for shall be granted within two working days. Further, the requirement of post registration physical verification of the premises has been also done away with in this case. 2
Issue -2 w.e.f. 1 st Jan 2016 - Mandatory quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment. Sl. NATURE OF TRANSACTION 18. Purchase of jewellery/bullion MANDATORY QUOTING OF PAN (RULE 114B) Existing New requirement requirement Payment of Rs.5 Deleted and merged with lakh or more at next item in this table any one time or against a bill More detail appendix-1 Issue -3 w.e.f. 1 st Jun 2013 - Mandatory for collection of TCS at 1% on sale of bullion or Jewellery. Section - 206C, Income-tax Act, 1961 (1D) Every person, being a seller, who receives any amount in cash as consideration for sale of bullion 35 [***] or jewellery, shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent of sale consideration as income-tax, if such consideration, (i) for bullion, exceeds two hundred thousand rupees; Rs. 2 lacs or (ii) for jewellery, exceeds five hundred thousand rupees. Rs. 5 lacs (2) The power to recover tax by collection under sub-section (1) or sub-section (1C) or sub-section (1D) shall be without prejudice to any other mode of recovery. (3) Any person collecting any amount under sub-section (1) or sub-section (1C) or subsection (1D) shall pay within the prescribed time the amount so collected to the credit of the Central Government or as the Board directs : Provided that the person collecting tax on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this section shall, after paying the tax collected to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority 36, or the person authorised by such authority, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. 37 Regards CA. Ashwani Rastogi #9990999281 Extract from the Notification 3
Government of India Ministry of Finance Department of Revenue Tax Research Unit By: Alok Shukla (Joint Secretary) alok.shukla65@nic.in D.O.F.No.334/8/2016-TRU New Delhi, the 29 th February, 2016. Dear Principal Chief Commissioner / Chief Commissioner / Principal Commissioner, The Finance Minister has introduced the Finance Bill, 2016 in Lok Sabha today, i.e., 29 th February, 2016. Changes in Customs and Central Excise law and rates of duty have been proposed through the Finance Bill, 2016. In order to prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts, the following notifications are being ***** Excise duty of 1% (without CENVAT credit) or 12.5% (with CENVAT credit) is being levied on articles of jewellery [excluding silver jewellery, other than studded with diamonds/other precious stones] with a higher threshold exemption upto Rs. 6 crore in a year and eligibility limit of 12 crore. Thus, a jewellery manufacturer will be eligible for exemption from excise duty on first clearances upto Rs. 6 Crore during a financial year, if his aggregate domestic clearances during preceding financial year were less than Rs. 12 crore. In other words, jewellery manufacturer having aggregate value of clearances in a financial year exceeding Rs. 12 crore, will not be eligible for this threshold exemption in the subsequent financial year. Necessary amendments have been made in notification No.8/2003-Central Excise, dated 01.03.2003 in this regard. 3.2.1 The SSI exemption for the month of March, 2016 for jewellery manufacturers will be Rs.50 lakh, subject to the condition that value of clearances for home consumption from one or more manufacturer from one or more factory or premises of production or manufacture during the financial year 2014-15 should not be more than Rs. 12 crore. Computation for this purpose shall be done in accordance with the provisions of Para 3A 4
of notification No. 8/2003- CE. For this purpose, a certificate from a Chartered Accountant, based on the books of accounts for 2014-15, shall suffice. 3.2.2 Similarly, for determining the eligibility for availing of the SSI exemption from 2016-17 onwards, a certificate from a Chartered Accountant, based on the books of accounts for 2015-16, shall suffice. 3.2.3 Excisable goods which were produced on or before 29.02.2016 but lying in stock as on 29.02.2016 shall attract excise duty upon clearance. Jewellery manufacturer shall keep a stock declaration of finished goods, goods-in-process and inputs as on 29.02.2016 in their records duly certified by a Chartered Accountant so as to enable the manufacturers to claim CENVAT credit on inputs or inputs contained in goods lying in stock as already provided for in Rule 3(2) of the CENVAT Credit, Rules, 2004, if he so desires. No stock declaration, will, however, be required to be made to the jurisdictional central excise authorities. 3.2.4 Further, the following simplified procedure and guidelines are being issued for strict compliance: i. Registration once applied for shall be granted within two working days, along with simplified registration procedure as prescribed under Notification No. 35/2001-CE. ii. iii. iv. Further, the requirement of post registration physical verification of the premises has been also done away with in this case. Necessary amendments have been made to Notification No. 35/2001-CE for this purpose. Moreover, documents being maintained by the jewellery manufacturers for State VAT or Bureau of Indian Standards (in the case of hallmarked jewellery) shall suffice for Excise purposes also. The private records of the jewellery manufacturers, giving details of daily stock for his own purposes, shall be accepted for the purposes of Rule 10 of the Central Excise Rules 2002. v. A notification, providing for an optional centralized central excise registration for jewellery manufacturers with centralized billing or accounting system is being issued under Rule 9 (2) of the Central Excise Rules, 2002. vi. Also, jewellery manufacturers will be eligible for a simplified return applicable for optional excise duty of 1%/2% without CENVAT credit under notification No.1/2011-CE, under Rule 12 of the Central Excise Rules, 2002. 5
vii. viii. Rule 12AA of the Central Excise Rules, 2002 provides that in case of goods falling under chapter heading 7113, every person (not being an EOU or SEZ unit) who gets jewellery made from any other person, and supplies the raw materials such as gold/silver/gemstones to the job-worker for such manufacture, the duty liability would be on such person who gets articles of jewellery made from the job worker. In such cases, the principal manufacturer (and not job worker) will be required to get Central Excise registered, pay duty and follow other compliance requirements. This will ensure that small artisans/goldsmiths are not required to take any excise registration. The levy is based on self-assessment and therefore, no physical visits shall be made to registered units in the normal course. 2. I would like to emphasise that the Board desires that all necessary steps shall be taken to enable the new taxpayers to comply with these new levies without any difficulty. The thrust of these new levies shall be voluntary compliance. Therefore, visits to such units should not be made in the normal course. These instructions may be disseminated to the field formations for strict compliance. ************* 6