Skip to main content

Jewellers await BIS rules on self certification

Jewellers await BIS rules on self certification
Reports of compulsory hall-marking of gold jewellery after the government notified the revised Bureau of Indian Standards (BIS) Act last week have sent ripples across the jewellery industry.Many big players have started claiming they sell only hallmarked jewellery.However, those selling non-hallmarked jewellery are prioritising sale of such jewellery and others are considering various options, including self-certification, till all jewellery is hallmarked.
According a report released two years ago by the World Gold Council, “Only 30 per cent of Indian gold jewellery is currently hallmarked.There are wide spread differences in purity and an average under caratage of anywhere between 10 per cent and 15 per cent.” Making hallmarking of gold jewellery compulsory hasabig impact from the gold demand perspective as old jewellery will have to be converted to new compliant jewellery and its caratage will also have to be 14, 18 or 22, as mandated by the BIS Act, once it is implemented.
Sudheesh Nambiath, lead analyst, Precious Metals Demand,GFMS Thomson Reuters, said, “From the fresh gold demand perspective, it could be significant as we are looking at conversion of average 85 per cent purity (sold as 91.6 per cent) jewellery to actual 91.6 per cent.” Jewellers, on average, sell less pure jewellery, especially in northern states and in rural area where hallmarking has not picked up. The national average of purity is estimated at 85 per cent compared with the claim of 100 per cent.
One big jeweller said those selling less pure or non-hallmarked jewellery “would want to get rid of the jewellery that is of lower purity”.There should be good discounts offered to customers, he added.The government note on the BIS Act, 2016, said, “In the new Act which came into force from October 12, enabling provisions have also been made for making hallmarking of precious metal articles mandatory.
The new Act also allows multiple types of simplified conformity assessment schemes, including self-declaration of conformity against a standard, which will give simplified options to manufacturers to adhere to the standards and get certificates of conformity.” Jewellers are also waiting for detailed rules from the BIS how self-certification will be permitted and whether these will solve their problems.
However, sources Business Standard spoke to said the government would provide time for handling old stocks that were not in conformity with the Act.Tanya Rastogi, director, Lala Jugal Kishore Jewellers, one of Uttar Pradesh´s old jewellery houses, said, “The bigger jewellers are already mostly dealing in hallmarked goods.
In fact, they shall regain sales they lose to smaller jewellers due to higher prices.That said, 70 per cent of the gold is actually consumed in the rural sector in our country and is rampantly nonhallmarked.This ratio of non-hallmarking becomes wider in areas like my state UP. That´s where sales shall be hurt.”
Gold imports by banks get IGST exemption
The government has issued a notification allowing 36 banks and five canalising agencies, including MMTC and MSTC, to import gold without payinga 3 per cent integrated goods and services tax (IGST). It´sabig relief for financial institutions importing gold, as the 3 per cent tax was an additional burden on them.
Till now, importers´ working capital used to get blocked until they got the refund on GST paid.However, the new notification removes that hurdle and smoothens the process of import.Analysts say gold imports on a consignment basis, which had almost stopped after the implementation of the GST, will resume again.So far, most import was happening as gold metal loans usually by banks.
In the case of consignment import, an importer kept gold ready in stock and it was priced when sold. This was helpful as sudden demand helped banks to give virtually spot delivery.However, due to the 3 per cent IGST payable on imports, banks and other agencies had stopped it.
The latest notification doesn´t change anything for traders who will have to pay 10 per cent import duty and 3 per cent IGST and claim back the IGST as input credit.Gold refineries that import dore gold or unrefined gold, will have to pay the IGST and hence, they are at a disadvantage compared to refined gold importers.
Surendra Mehta, national secretary, Indian Bullion and Jewellers Association, said, “Removing the IGST on gold imports and not on dore imports (gold dust) will kill Indian gold refining industry.
The Business Standard, New Delhi, 17th October 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…