Excise Duty on Gold Jewellery - Kal, Aaj aur Kal?

By Vijay Kumar

IT was in the Budget speech of 2005 that the then Finance Minister Chidambaram said, "Expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery I propose to levy an excise duty of 2%" and the gold rush started for the Department. Within hours of the FM's budget speech, excise sleuths descended on gold shops to do stock taking. The agitated traders pulled down shutters and closed business. Within three days on 4.3.2005, Board came up with a clarification that every sign or mark is not a brand name.

Even though the duty was only on branded jewellery, there was serious resentment.

Finance Minister Pranab Mukherjee in his 2009 Budget Speech said, "I fear that my proposals relating to gold and silver on the customs side would somewhat dent my popularity with women. I propose to salvage this by fully exempting branded Jewellery from excise duty."

In the 2011 Budget, the same Finance Minister brought back the 1% excise duty on gold jewellery. Gold merchants again protested vociferously. But in the very next Budget 2012, Finance Minister Pranab Mukherjee said, "The House would recall that I had re-introduced a levy of excise duty of 1 per cent on branded precious metal jewellery in the last Budget. As a measure of rationalisation, I propose to include jewellery, not bearing a brand name, under its ambit."

All hell broke loose and the reaction was so strong that at the beginning of the budget discussion in the Lok Sabha on 7th May 2012, Finance Minister Pranab Mukherjee retracted saying, "A related proposal that has attracted public attention is the imposition of Central Excise duty on unbranded precious metal jewellery at the rate of 1%. Madam Speaker, I would like to reiterate that the levy was well-intentioned and introduced not so much for raising revenue as for rationalization and movement towards GST. However, the outpouring of sentiment both within and outside the House indicates that we are not ready for it. As such, the Government has decided to withdraw the levy on all precious metal jewellery, branded or unbranded, with effect from 17th March, 2012."

Four years later, Finance Minister Arun Jaitley has brought back the same enterprise and the gold trade has reacted with the same vigour. The FM said in his 2016 Budget Speech, "I also propose to impose an excise duty of '1% without input tax credit or 12.5% with input tax credit' on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores respectively. Necessary steps will also be taken to enable the new taxpayers to comply with this levy without any difficulty."

And the gold trade is on strike since then.

Why is the Government repeatedly imposing this golden duty and withdrawing it? Is there a Section in the Board meant to embarrass Finance Ministers periodically with this gold levy? Is the present Finance Minister informed about the earlier fiascos?

Or are they condemning him to repeat the mistakes of history?

Another Mackenna's gold in the making!

Legend has it that a gold fortune is hidden in the Canyon, Del Oro guarded by the Apache gods. Marshal Mackenna kills an Indian chief and gets a map that supposedly shows the way to the treasure. Though skeptical, he memorizes the directions before burning the map.

Mexican outlaw Colorado and his gang had been tracking the old man to get the map and they were chased by the U.S. army. He takes shelter in the house of a judge whom he kills and kidnaps his daughter, Inga as a hostage in case the cavalry catches him. Colorado forces Mackenna to lead him to the canyon.

On their trek, they are joined by others infected by gold fever, among them a newspaper editor, a storekeeper, a priest etc,. They are trailed by the cavalry, under Sergeant Tibbs, who periodically sends messengers back to his commanding officer, supposedly to keep him informed. Eventually, the patrol is reduced to just a couple of men whom Tibbs himself kills so that he can join the outlaws.

Finally, they reach the place shown in the map. They enter the canyon and find pure gold on the sides. While the rest are celebrating their great fortune, MacKenna escapes with Inga. Colorado kills the rest of the gold hunters. The Apaches attack and the rocks start shaking and the whole canyon begins crashing down. Colorado leaves in disgust, believing the gold has been buried beyond his reach. MacKenna and Inga also escape. In the end, a saddlebag on the horse Mackenna took in the mad scramble is found to be full of gold.

Yes there was gold after all.