Why are jewelers on strike against the government? A simple explanation:
They can no longer do tax evasion, illegal import, sell jewellery in black or cheat the customers. Government has done a excellent job in one single act. The Jewelers are going to pass the 1% tax to customers, they are not worried about that. So what are they worried about?
1. Illegal Import: Imagine Jeweler A, who sells 1000 kgs gold ornaments per year. He has to pay 10% import duty for every gold he has imported. Of the 1000 kg if he has imported only 800 kg via proper channel and rest via black market. So for 200 kg govt. has lost 10% tax. After converting to jewellery, If the Jeweler A pay excise duty for 1000 kg sold gold, customs will ask where did he get the additional 200 kg. This will expose Jeweler A’s illegal imports. Almost all big jewelers does this. So they are against it.
2. Tax Evasion : In the above case, currently jeweler A will pay tax on the sale of only 800 Kg of gold, since only 800 kg was legally imported. For the rest he wont pay tax. Now after the excise duty, he has to pay tax for the remaining 200 kg also.
3. Selling Jewellery in Black: Most of the big Jewellery sell in black to their largest customers (politicians, large farmers, govt officers, doctors, lawyers etc) who themselves want to convert their illegal earnings to Gold. Now Govt. is making PAN mandatory for any sale above 2 Lakh. This will make customers reduce their buying and in turn reduce Jewelers sales in black.
4. Cheating Customers: In the above scenario if Jeweler A imports 800 kg and convert them to jewellery, A might charge 10-12% on wastage. So for 800 kg wastage comes to 96 kg. But on this 96 kg, the actual wastage might be around only 10-16kgs (unrecoverable). So remaining 80 kg they will convert it as gold and sell to customers. Now the Jeweler A has imported only 800 kg but sold ~860 kg (780 actual gold + 12% wastage) gold. This will expose their cheating of customers and will force them to lower their wastage charges.
Share & shame the jewelers! Support a good govt policy.
By Reena Singh