New Delhi: In a big relief to jewellers and customers, the Narendra Modi government today rolled back its budgetary decision to impose 1 per cent tax collection at source (TCS) on cash purchase of gold jewellery of Rs 2 lakh. The threshold has now been raised to the earlier limit of Rs 5 lakh.
The revised decision will come into effect from June 1.
The latest decision is expected to provide a huge to relief to jewellers who had been on a 45-day strike after Finance Minister Arun Jaitley in his Budget speech in February proposed 1 per cent excise tax on non-silver jewellery. The strike had led to a massive pile up of stocks and jewellers have been struggling to clear these stocks in view of high gold prices and bleak demand.
TCS of 1 per cent was imposed on cash purchase of jewellery worth Rs 5 lakh or more in 2012. This year, Finance MinisterArun Jaitley revised the amount from Rs 5 lakh to 2 lakh.
TCS was introduced as a measure to curb tax evasion and check black money transaction. It is collected by the seller from the buyer at the time of sale and is directly deposited with the government. The person from whom the TCS is collected gets credit for the same amount in his income tax return.
At present, there is 10 per cent duty on import on gold in India. India is the world's largest gold jewellery consumer. The country imports around 900 tonnes of gold annually.
Gold demand in the country hit a seven-year low in the first quarter of 2016 when sales declined 41 per cent year-on-year at 88.4 tonnes.
