Govt rolls back 1% tax on cash purchase of gold jewellery

The government on Tuesday rolled back its decision to apply 1 percent tax collected at source (TCS) on cash purchase of gold jewellery of Rs 2 lakh and above and raised the limit to Rs 5 lakh with effect from 1 June 2016, media report said.

Reacting to the news, jwellery stocks such as PC Jwellers, TBZ and Gitanjali Gems soared up to 4.3 percent on the BSE.

The government's move is likely to help boost demand for the gems and jwellery sector, which has witnessed a demand slowdown due to high gold prices and steep increase in import duty.

Representional image. Reuters

Finance Minister Arun Jaitley had in the latest budget also imposed 1 percent excise duty on non-silver jewellery which led to widespread protests by jewellers.

The jewellers were liable to pay excise duty with effect from 1 March 2016. The government has, meanwhile, set up a committee under former Chief Economic Advisor Ashok Lahiri to look into demand of agitating jewellers and also into their grievances with regard to compliance and operating procedures for payment of excise duty.

The gems and jewellery industry is estimated to have incurred over Rs 1 lakh crore loss due to the 42-day strike beginning March 2. Jewellers have also been protesting against the mandatory quoting of PAN by customers for transactions of Rs 2 lakh and above.

This is fourth time the government has rolled backed its own decision. Earlier it withdrew a decision to tax provident fund withdrawal. It also revoked restrictions imposed on PF withdrawal and a cut affected in PF interest rates.

With PTI