Thursday, February 9, 2012

Diamond industry wants to be brought under presumptive tax regime

Gems and jewellery exporters want to be brought under a ‘presumptive tax' regime in Budget 2012-13. According to them, India can also become a diamond processing and trading hub such as Belgium and Israel, where the presumptive tax regime has been successfully implemented.

Under the regime, tax is based on average income instead of actual income. Here, one proceeds on the legal presumption that the taxpayer's income would be the amount that is arrived at by using an indirect method of calculation, which is different from the normal rules based on the taxpayer's accounts.

Mr Rajiv Jain, Chairman, Gems and Jewellery Export Promotion Council (GJEPC), said though the Sivaraman Committee had recommended presumptive tax for the sector in 2006, the Government had failed to implement it till date.

According to Mr Sanjay Kothari, Vice-Chairman, GJEPC, under the presumptive tax regime, the Government could levy a tax of 3 per cent on the net profit of the taxpayer in the sector.

Mr Jain said according to the Sivaraman Committee, the introduction of a presumptive tax regime would encourage investment in the sector; retain trade, skilled labour and capital within the country; enable voluntary compliance leading to increased revenue; enhance the global competitiveness of the Indian industry; and foster increased employment opportunities.

If these recommendations were not implemented, it would lead to a shifting of business to other countries and non-fulfilment of the vision of establishing India as a diamond trading hub, he said, and added that it could also lead to a loss of jobs in India.

GJEPC also sought an import duty reduction on machinery and worked coral and withdrawal of 1 per cent excise duty on branded jewellery. It also wanted the Government to allow import of rough diamonds on consignment basis from mining companies such as Alrosa and De Beers.


On the reported under-estimation of petroleum and gems and jewellery exports by $12 billion during April-October 2011, Mr Kothari said it could be due to mistakes in counting gems and jewellery items taken abroad for exhibitions, as exports from India. Such an inclusion was a mistake because those items were only meant for exhibition, not sale, and were later brought back to the country, he said.

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