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MUMBAI: The next time a consumer enters a branded jewellery store of Tanishq
or Gitanjali, she will have to shell out a tad more on her purchase. This is because
government has reintroduced 1% excise duty on branded jewellery and branded
articles made from precious metals like gold, silver and platinum after waiving it
two years ago.

The levy will not apply to unbranded jewellery and articles such as utensils
made from precious metals, etc. Even branded jewellery or branded precious
metal articles that are exported are exempt from such a levy since it would
otherwise end up in exporting taxes.

Leading jewellers such as Gitanjali have termed the move as "one that will lead
to a lot of nuisance since the brand is not marked on the jewellery pieces." ML
Arora, AGM of Bank of India, said the amount would be absorbed by the
consumer since it was not "very significant." Another leading PSU banker, who
earlier worked in the bank's bullion division, said jewellers could resort to
under-reporting of branded jewellery manufactured to avoid the levy.

While one jeweller said the levy could result in unmarked jewellery sales being
stepped up, the PSU banker said such a step was unlikely as it would reduce the
brand equity of the seller. "I think the margins branded jewellers earn are good
enough to absorb the excise duty if they decide not to pass it on to their
consumers. If they choose to pass on the cost, it will not make much of a
difference to the consumer as she buys branded jewellery assured of purity and
resale value."

The Gems & Jewellery Federation, a nodal body of domestic jewellers, is set to
appeal to the government to waive the levy. "The reintroduction of the abolished
1% excise duty on "branded" jewellery, is a retrograde step for the industry. Five
years ago we made representations to the government and subsequently the
excise duty was withdrawn two years ago.We do not understand the rationale
behind this step. These kind of levies and back door licence raj measures will
create hardship, litigation and encourage corruption. We urge the finance
minister to rollback the 1% excise duty on "branded" jewellery.

Gems and jewellery industry today expressed disappointment over

reintroduction of 1% excise duty on branded jewellery in the Union Budget and
called for a rollback of the decision.
"The reintroduction of the abolished 1% excise duty on branded jewellery is a
retrograde step. Five years ago we had made representations to the Government
and subsequently the excise duty was withdrawn two years ago," All India Gems
and Jewellery Trade Federation Chairman Vinod Hayagriv said.

Finance Minister Pranab Mukherjee has proposed to levy 1% excise duty on

branded jewellery and branded articles of precious metals.
This will burden the gems and jewellery industry enormously and hamper its
growth, Hayagriv said.

The entire industry, he said, is working towards ethical, transparent trade

practices these kind of levies will create hurdles and encourage corruption. "We
urge the Finance Minister to rollback the proposed excise duty."
Echoing similar views, Gitanjali Group CMD Mehul Choksi said the decision will
have negative impact and create hurdles for jewellery industry in becoming a
modern and organised sector. "The one per cent Central excise levied on branded
jewellery should be reconsidered."

Choksi said marginal rise in the Minimum Alternate Tax (MAT) to 18.5% from
18% will add to the difficulties being faced by Special Economic Zone (SEZ)
developers and units operating in the tax-free trade enclaves.
However, he welcomed the introduction of self- assessment for Customs for
import-export and simplification in procedures for refunds as well as exemption
from service tax for services consumed within a SEZ.