New Delhi: Finance minister Arun Jaitley on Thursday said the country needs to decide if luxury goods such as gold should be kept out of the tax net, while essential items such as baby food, soaps, toothpaste and shoes face excise levy. He gave the statement in Parliament, rejecting the opposition’s demand to roll back the 1% excise duty on gold jewellery, prompting Congress and Samajwadi Party to walk out of Rajya Sabha.
“We have to decide on which items we will impose excise duty and if there is any structured trade, they (traders) do not get the right to resort to agitation against tax,” he said.
Jaitley also pointed out how the UPA government had rolled back excise on branded jewellery in 2009 and 2012, following protests by traders, while dismissing suggestions that excise duty was affecting small jewellers. The minister insisted that new norms would affect only large players and not too many players are above the Rs 6 crore threshold.
The finance minister pointed out how most of the states levied VAT on jewellery and even imitation jewellery attracted 6% excise duty. In a poser to Congress MPs, he suggested that the main opposition party should ask its government in Kerala to remove VAT on gold jewellery, which at 5% is the highest in the country.
Jewellers in several parts of the country were on strike for more than 40 days after the Centre announced the levy in the Budget. “Today when aam aadmi consumer items are being taxed, we will have to convince the country that a luxury item is kept out of the tax net,” Jaitley said adding people should develop the habit of paying tax on luxury items since it’s not right that the duty should be imposed only on essential items.
He made a case for bringing luxury goods such as gold within the tax net to cap GST at 18%. “Else we will have to increase the duty on essential items to maintain 18%… No political party can demand to keep the luxury item outside tax net, and also maintain 18% taxation. Because it can never be achieved.”