Budget for better India, Gems and Jewellery industry calls it a positive budget
Income tax for small companies with an annual turnover of Rs 50 crore, now to pay 25%, a 5% reduction; 96% Indian companies will get benefit of MSME tax cut.
With the Budget announcement just concluded, the jewellery sector had a lot of expectations from Finance Minister Arun Jaitley. With no negative announcement that would have affected the industry, the Indian gems and jewellery industry has termed the budget as positive.
The government’s aim for the year 2017 is TEC-India – Transform, Energise and Clean India. This is been one of the highlights of this year’s budget to bring in more transparency in the economy and move the country towards digital age. The FM Aurn Jaitley spoke about how Demonetization seeks to create a new normal and will lead to a higher, cleaner GDP. He pointed out that parallel economy is unacceptable in inclusive economy. He termed GST and demonetization of bank notes as two tectonic policy reforms of last year and said that it will have only a transient impact on the economy.
As far as Indian gems and jewellery industry is concerned, there has been no announcement in support or against the industry. Terming it as a positive move, Nitin Khandelwal, GJF Chairman said “No negative news is positive news. We expected some subsidy in usage of digital payments and gateways, which would encourage more and more people to go digital. Industry is now waiting for GST implementation and gearing up for the same.”
Terming it as a positive budget, Ishu Datwani, Founder, ANMOL said “The budget is along the consistent line. The fillip to the rural and infrastructure is a plus. Thankfully, there has been no negative announcement for the jewellery sector. In totality it's a positive budget. Sometimes there are people like the Non-Residents, who have official cash over Rs.3 lakhs. So that business may be affected but it's a small negligible percentage."
Ashok Vastani from Dass Jewellers termed this budget at election budget. He said “This seems to be election budget. We partnership firm whose turnover is around Rs. 50 crore, have additional burden of 10 per cent surcharge. No relaxation to organised jewellery sector.”
Below are the key takeaways of the Budget 2017:
Focus shifted from governance and ease of business to underprivileged, poor and digital economy
No changes in the Service Tax and Excise Duty as GST draft will be launched soon
12.5 per cent CVD levied on Silver medallions, coins and articles, etc. to protect domestic manufacturing units
1 per cent TCS on jewellery sales removed.
Income tax for small companies with an annual turnover of Rs 50 crore, now to pay 25 per cent, a 5 per cent reduction
Dividing corporate tax payers into two categories might encourage people to split companies so that each single entity stays within the MSME category and attracts lower corporate tax. Around 96 per cent Indian companies are likely to get benefit of MSME tax cut.
No transaction above Rs. 3 lakhs to be permitted in cash
Government had already made mandatory PAN card for jewellery transactions above Rs. 2 lakh so this announcement wouldn’t be hampering the industry. Supporting the move, Aditya Pethe, Director, WHP Jewellers said “The limit of Rs. 3 Lacs will not affect industry. The overall budget is good and will drive consumption.”
Seconding the thought, Tanya Rastogi, Director, Lala Jugal Kishore Jewellers & IBJA said “Currently, a jeweller is expected to take the buyer’s PAN card details on purchases above Rs.2 lakh. Thus, the Rs. 3 lakh cash limit announced in today's budget does not impact the jewellery industry much. Also, averaging, 70 per cent Jewellery products sold are within the bracket of Rs. 2 lakhs. The bullion sale already has a restriction at 50K, beyond which we need to take PAN card details. But since other cash based industries may be hit by the ruling, I am of the mind that this will divert the cash more towards our industry.”
Samir Sagar, Director, Manubhai Jewellers shared similar view. He said “We don't see this move largely impacting the Gems and Jewellery sector since, post demonetization, most of the transactions have been via banking or credit card.”
Personal income tax: tax rate reduced to 5 per cent from 10 per cent for those in Rs. 2.5-5 lakh bracket
“Relaxation in direct taxes will bring a huge respite to taxpaying middle class citizens,” said Saurabh Gadgil- Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association.
10 per cent additional surcharge on those earning Rs. 50 lakh-1 crore
Start ups were given income tax exemption with conditions for carrying forward losses with continuous holding of 51 per cent voting rights has been relaxed if the promoter holding continues.
Profit linked deduction for three years of five has changed to three years out of seven years.
Minimum Alernative Tax (MAT) to be phasing out exemptions will kick in from April 1, 2017. Full benefit will only be available to government after seven to ten years. MAT credit can be carried forward by companies for 15 years.
FM, Arun Jaitley made a large number of announcements to push the digital economy of the country in his Budget 2017 speech.
Commenting on the digital move and overall impact of the budget, Saurabh Gadgil- Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association, said “The Union Budget FY 17-18 seems to be in the right direction, it lends focused development towards sectors like infrastructure, agriculture railway etc. It also focuses on creating ease of doing business and reformation in FDI policies. Furthermore, the government has welcomed digital payments and has furthered the initiative with Aadhar based cashless payments. The budget will bring about growth and prosperity in the rural sectors which in turn will create a positive outlook and sentiment towards retail economy. The Gems and Jewellery industry was deeply stung by multiple issue in past year, the budget has no negatives, hence we are hoping for it to be all positive. The advent of gold spot exchange will bring a transparent platform where industry will trade locally instead of depending on the international market. We are positive this budget will bring about the required confidence in the economy and benefit the industry in the long run.”
Commenting further on the move, Ms. Kajal Jain (Founder – Ahilya) said “It is an excellent, growth oriented budget which will give a great fillip and impetus to all companies working in the online space. Ahilya Jewels is particularly excited to be a part of this great leap forward, in a sense! With Mr. Jaitley stating very correctly that India is at the cusp of a massive digital transformation and listing ‘digital’ as one of the 10 key themes in the Union Budget 2017, we believe that all these measures will help us only see more growth in the years to come. Accessibility to broadband and digital devices will give a further fillip to the online retail space which we look forward to.”
Last year, gems and jewellery industry witnessed a lot of issues. Though, none of the demands of the industry have been fulfilled in the industry, it has no negative as well. Therefore, the industry is not complaining. Move towards digitization will help bring in more transparency in all the industries, especially gems and jewellery, which has been considered as the black sheep of the economy.
With no change in Service tax and Excise duty, all eyes are on GST now. Hopefully, even GST will bring in all the positive news that the industry is expecting.