As the jewellers' strike against levy of excise duty entered fourth week, Finance Minister Arun Jaitley offered to walk the extra mile to ensure that small traders were not harassed but made it plain that luxury items cannot go untaxed.
Gold and other jewellery will be part of the Goods and Services Tax (GST) regime which will subsume the 1 percent proposed excise levy, as there cannot be a situation where essential items are taxed and luxury items like gold are left out, he said in an interaction with journalists at the PTI office."A luxury item must pay its share of taxes. So on procedural harassment, if they have any suggestions, I am willing to accept for simplification so that there is no harassment... I am willing to take an extra step. But indefinitely India can not have a situation where luxury items go untaxed," Jaitley said.
The government's decision to levy 1 percent excise duty on jewellery had created sharp reactions from jewellers who have been on strike for 26 days. The jewellery industry has been demanding roll back of excise duty hike.
The government has set up a committee under former chief economic advisor Ashok Lahiri to look into the problems of jewellers and suggest ways to eliminate harassment.
"If there are any other procedural simplification suggested by the Ashok Lahiri committee, I will be too wiling to consider them.... But one fact which the whole of the society has to accept is that luxury items cannot go on being untaxed. When items and commodities which are used by average person are all being subjected to tax, a luxury item like gold can not go untaxed," Jaitley said.
The minister further said that the committee on GST headed by CEA Arvind Subramanian was against exempting gold arguing that "if you keep gold out... tax on other products have to go up. Other products cannot subsidise gold".
"Their key concern that there must be no harassment, I completely agree with. The nature of their trade is also such that steps need to be taken to avoid harassment.
"Therefore one has to very carefully handle this. So that part of fear, their concern, I share that concern. That is why recently we have issued very strict guidelines. Only the primary manufacturers will be liable for excise, no job worker, no small trader etc. We have kept the threshold very high," Jaitley said.