According to the Business Standard, Indias domestic gems and jewelry industry has put in a strong request to the government to modify tax deduction at source (TDS) in the proposed Direct Tax Code (DTC).
Today, jewelers are obligated to pay 10% tax at source, no matter what their business margin is. Taking into account that the entire jewelry industry operates on an extremely small margin, this has a huge impact on the industry.
Ashok Minawala, jewelry industry veteran and former president of the All India Gems and Jeweler Trade Federation (GJF), also asked the Ministry to loosen up on its search and seizure provisions and tax on gross assets.
A company earning 2 % net profit will pay the same tax as a company earning 8 % net profit. Therefore, the proposed tax should be calculated on the basis of net profit and not on the assets, stated Minawala.
In addition, the GJF made it clear that the proposed provisions will be highly detrimental to the Indian gem and jewelry industry, perhaps even causing it to shut down.
Due to Indian consumers love for gold, the industry is estimated to grow between 12-15% in 2010, a higher figure than last year, which recorded growth of between 10-12%.