India’s Direct Tax Code does not find industry support

Provisions of the Direct Tax Code of India evoked strong opposition from The All India Gems & Jewellery Trade Federation (GJF), the national body of the jewellery trade, and Gems and Jewellery Industry (GJI) the apex industry body. Mr. C. Vinod Hayagriv, Chairman, All India Gems & Jewellery Trade Federation (GJF), said, “GJF strongly objects to two key issues of DTC which includes Search & Seizure provisions and 10 percent TDS on all payments.” Both the industry bodies have also made representations to the Finance ministry to seek modifications in the DTC.

With the seizure of such stock-in-trade of jewellery, bullion and precious stones, the assesses of the GJI would face cessation of their manufacturing operations and subsequent loss of sales. The GJF believes this is total discrimination towards a single industry, as such extreme measures are not applied in any other industry so far and plans to call a nationwide strike if amendments are not made.

“We also strongly oppose the deduction of 10 percent tax on all payments made for gold, diamonds, jewellery etc, as it would result in blockage of working capital for the jewellers who are presently facing a major liquidity crunch and refunding TDS amount from the government is another tedious task”, said Mr. Ashok Minawala, former Chairman, All India Gems and Jewellery Trade Federation. The industry has communicated its strong agitation in this regard.

The finance ministry of government of India, during its last Budget- 2009 has made a commitment to work at bringing about structural changes in the direct tax system by releasing a new DTC to consolidate and amend the law relating to direct taxes. Pursuant to this, a Draft DTC along with a Discussion Paper has been released to the public for debate in 2009. Based on the inputs received, the Government proposes to finalize the DTC Bill for its introduction in the Parliament.

A representation has been earlier filed by the GJF, who speaks for more than 300,000 manufacturers, wholesalers and retail jewelers in India. GJF has asked the Ministry of Finance in its representation, to relax search and seizure provisions that are discriminatory and non practical.