New Delhi: Non-branded gold jewellery is set to get expensive by about Rs 1,000 per 10 grams due to the budgetary proposal to bring them under the excise duty net, industry players said.
Besides price rise, leading jewellers are of the view that the move would encourage consumers to purchase gold without receipts.
"Excise duty on unbranded jewellery was not necessary. High level of taxes will affect consumers as they have to pay more on gold purchases post Budget," Gitanjali Gems Managing Director Mehul Choksi told.
The move would also affect the industry badly, he added.
"At current level of gold prices and with proposed 3-4 percent hike in duties (comprising customs duty, excise duty and Tax Collection at Source), consumers would have to pay Rs
1,000 more on purchase of 10 grams of gold both branded or unbranded jewellery," said city-based P P Jewellers Director Pawan Gupta.
Gold was ruling firm at Rs 28,140 per 10 grams in the national capital on Friday.
In the 2012-13 Budget, the government proposed to levy 1 percent excise duty on non-branded gold jewellery too besides doubling import duty on gold to 4 percent.
In order to reduce the quantum of cash transaction in bullion and jewellery sector and for curbing the flow of unaccounted money in the trade, the government has proposed that jeweller should collect 1 per cent tax from every buyer if sale consideration exceeds Rs 2,00,000.
Protesting the proposal, bullion and jewellery traders in several parts of the country, including Delhi and Mumbai, have downed shutters for three days till tomorrow.
Besides increase in prices, Gupta said there would be a dent in demand by up to 30 per cent, especially in big shops, where sales would come down on account of high taxes.
In small/medium jewellery shops, more consumers would go for gold buying without receipts to evade taxes, he noted.
"About 3-4 percent tax burden on gold jewellers will have to be passed on to consumers. If done, gold would become expensive," Suresh Hundia of Bombay Bullion Association said.
About 98 percent of gold jewellery is made and sold unbranded in the country. The move to tax this segment would affect the livelihood of at least one crore workers involved in this industry for livelihood, he said.
Bullion experts said it would be difficult on the government's part to implement excise duty, considering the large number of small shops and artisans dominating this business.
India, the world's largest consumer of gold, imported 967 tonnes of the precious metal in 2011.