The Finance Ministry will issue a circular next week to clarify doubts on excise duty for unbranded gold jewellery. The Budget levied excise duty at the rate of one per cent on unbranded gold jewellery.

One of the key provisions of the detailed circular is related to small scale exemption. It says any jeweller with a turnover of Rs 13.3 crore in 2011-12 will be eligible for small-scale industry exemption. It means the jeweller need not pay any excise duty on jewellery turnover up to Rs 5 crore in 2012-13.

This limit has been calculated on the basis of the tariff value of 30 per cent. It was announced in the Budget that the one per cent excise duty will be levied at 30 per cent of the transaction value.

However, computation of this turnover will not include clearance for export, clearances of goods supplied to Special Economic Zones or Export Oriented Units, clearances bearing the brand name of another person and clearances of goods manufactured on job-work for another person.

In case of registration, it will be clarified that any person with a turnover of less than Rs 5 crore in any of the financial year need not get registered. Here it has also been said that, if a person whose turnover was Rs 13.3 crore in the previous year, but comes down to Rs 5 crore during the current year will not require to be registered.

If an artisan or goldsmith manufactures jewellery only on job work for other manufacturers who supply him raw material, he will not be required to register. Even if he adds some materials from his side, even then he is not required to pay excise duty on that. The responsibility of paying tax lies with the person who outsources the job.

However, if an artisan or goldsmith manufactures on his own account by buying the raw material himself and his turnover is more than Rs 5 crore, then only he will be liable for registration and payment of excise duty.

It will also be clarified that if a jeweller has chain of stores in one city or various cities, then only the main office or manufacturing unit will be required to register and not all the showrooms. Here the premise is that excise duty is applicable to the manufacture of goods and not the trading.

>shishir.s@thehindu.co.in

Related Topics