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Kerala jewellery firms protest retrospective collection of purchase tax

LiveMint logoLiveMint 03-04-2017 Deepti Govind

Bengaluru: Jewellery store owners in Kerala, led by Kalyan Jewellers, Malabar Gold, Bhima Jewellers and others, started protesting on Monday against the retrospective collection of 5% purchase tax that was imposed by the then United Democratic Front (UDF) government in 2013-14.

The protest, called by the Kerala Jewellers’ Association, started from the secretariat building at Trivandrum and was led by the association’s co-ordination committee members, including Kalyan Jewellers’ founder T.S. Kalyanaraman, Bhima’s chairman B. Govindan and Malabar Gold’s chairman M.P. Ahammed.

The agitation is against the retrospective collection of a 5% purchase tax that was introduced by the UDF government in 2013-14.

The tax was not levied then as the government had not devised a method of collecting it, according to a spokesperson at a jewellery firm.

But it was inadvertently included in the financial bills presented by UDF finance minister K.M. Maani in 2013-14, the spokesperson said.

The tax authority has now served notices to various jewellers in Kerala for a total amount of Rs2,600 crore, the association said in a statement.

“Several representations highlighting the challenges faced by the industry on this issue have been made to the government till date, but there has been no resolution to the problem. The purchase tax and compounding of sales tax as done in Kerala does not exist in other states. All associations/federations involved in gold business are participating in this agitation,” said Malabar Gold’s Ahammed.

Further, on 5 April, all gold show rooms will be closed in Kerala as a part of the agitation. The next plan of action will be decided based on the government’s response, the association said. In case the purchase tax collection is not waived, jewellery showrooms will remain shut indefinitely, the spokesperson quoted above said.

The association has asked the Kerala chief minister to look into the matter and sort it out urgently, it said in the statement. “Sales tax revenue to the state from gold sales is around Rs480 crore per year. If the strike continues the tax revenue will be affected badly. Buyers will go to neighbouring states, where the tax component is lower than Kerala,” the association added.

The sale or purchase of gold, silver and platinum in any form attracts a 5% VAT (value-added tax) in Kerala. Exchange of old jewellery is also treated as sale under the state’s VAT policy. Since customers or individuals are not registered sellers, the onus is on the jewellery firm to collect it from customers and pay it to the government.

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