Government rolls back 1 per cent TCS on cash purchase of gold jewellery
In its bid to boost demand for gold jewellery, the government has rolled back its budget decision to apply 1 per cent tax collection at source ( TCS ) on cash purchase of gold jewellery of Rs. 2 lakh and above and raised the threshold to the earlier Rs. 5 lakh with effect from June 1. The decision is a welcome change for the jewellery industry which is grappling with the aftermath of 42-day strike. The jewellery industry was protesting against imposition of 1 per cent excise duty on gold and diamond jewellery — that ended unsuccessfully in mid-April. It is becoming difficult for the jewellery industry to offload their inventory that piled up during the strike. Gold demand in the country hit a seven-year low in the first quarter of 2016 when sales declined 41 per cent Y-O-Y at 88.4 tonnes. This is 44 per cent below the five-year quarterly average of 156.7 tonnes. India's annual consumption of gold is 850-900 tonnes, says reports. Saurabh Gadgil, MD at PNG Jewellers, said prices have increased almost 20 per cent since January and is currently ranging between Rs. 29,500-30,000 per 10 gm. "There is very little demand in the market. However, the Rs. 5 lakh relief is expected to create some movement as there are wedding dates in June as well," Gadgil said. "Government's decision to roll back 1 per cent TCS on cash purchase of gold jewellery of Rs. 2 lakh and above is a favourable step for the jewellery industry. It is good decision & we hope it will have a positive impact on gold jewellery sales," stated Ishu Datwani Founder Anmol Jewellers. More on TCS TCS — introduced as a measure to curtail tax evasion and keep a tab on black money transactions — is collected by the seller from the buyer at the time of sale and is deposited with the government. The person from whom the TCS is collected gets credit for the same amount in his income tax return. TCS of 1 per cent was imposed on cash purchase of jewellery worth Rs. 5 lakh or more and of bullion worth Rs. 2 lakh or more in 2012.