Share prices of gold companies rallied on Thursday in the range of 1.50 to 3 percent on the Bombay Stock Exchange (BSE) after the government relaxed excise duty rules on gold jewellery sales.
Gitanjali Gems stock was trading at Rs. 41.40 at around 11.15 a.m. on Thursday, up 1.47 percent from its previous close. Similarly, shares of PC Jeweller Ltd and Titan Company rose 3.10 percent and 2.47 percent respectively and were trading at Rs. 382.50 and Rs. 414 respectively at around the same time on the BSE.
Jewellers having annual sales of up to Rs. 15 crore are exempt from paying excise duty; the limit was Rs. 12 crore earlier.
The government also said that jewellery firms won't be subject to audit by the excise department for the first two years if their sales is less than Rs. 100 crore.
Other changes announced by the government include:
No excise duty may be payable on the sale of traded goods
Movement of jewellery, which does not involve sale, for example, movement of jewellery, to be shown as samples, branch transfers not involving sale, for display in exhibition, for hallmarking, and for approval before sale, may not be liable to excise duty. No transit checks by excise officers.
When a retail customer brings jewellery [other than in form of gold or any precious metal] to a jeweller, which is converted into new jewellery by the jeweller or a job worker of such jeweller, excise duty will be payable only on value addition, including cost of additional materials and labour charges charged, subject to the maintenance of certain records.
Repairs and alterations, which do not change the identity, character and use of the goods and do not result in a new item is not "manufacturing" and may not attract excise duty.
No visit, search and seizure at job workers premises.
No visit to premises of the principal manufacturer [jeweller], except on the basis of specific intelligence and with the approval of Commissioner or equivalent rank officer.
In the budget for 2016-17, the Central government had imposed 1 percent excise duty (without input and capital goods credit) or 12.5 percent (with input tax credit) on jewellery articles, leading to nationwide protests by jewellers. It was called off after the government assured to look into their grievances and formed a panel to look to address them.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]