Bringing in some relief to the jewellery traders, the Union Government has rolled back its budget decision to apply one per cent Tax Collection at Source (TCS) on cash purchase of gold jewellery of Rs 2 lakh and above.
The Government has raised the threshold to the earlier Rs. 5 lakh with effect from June 1.
The spokesperson of India Bullion and Jewellers Association of India, Ketan Shroff informed that earlier also it was Rs. 5 lakh and said, “It is not new. TCS of 1% was imposed on cash purchase of jewellery worth Rs 5 lakh or more and of bullion worth Rs 2 lakh or more in 2012.”
Ashok Kumar, Secretary general, Delhi Jewellers Association said, “The move is welcomed but PAN card limit is still Rs 2 lakh. TCS would give little bit benefit to customers but I don’t think so there would be a big boost. Normal customer purchasing power would increase if they raise the limit for PAN card up to Rs 5 lakh. Everyone don’t keep PAN card and in wedding season who purchases gold worth Rs. 2 lakh only.”
Gold demand in the country hit a seven-year low in the first quarter of 2016 when sales declined 41% year on year at 88.4 tonnes. This is 44% below the five-year quarterly average of 156.7 tonnes. India’s annual consumption of gold is 850-900 tonnes.
TCS — introduced as a measure to curb tax evasion and check black money transactions — is collected by the seller from the buyer at the time of sale and is deposited with the government.