NEW DELHI (Commodity Online): The proposal to levy 4% excise duty on silver manufactured from smelting zinc or lead in India budget for the financial year 2013-14 would negatively impact gems and jewellery industry in the country said, Dr. Suresh Surana, founder, RSM Astute Consulting Group.

A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares would leave no capital gains in hands of shareholders, he noted.

The tax on payments by way of royalty and Fees for Technical Services (‘FTS’) to non-residents from 10 percent to 25 percent (subject to beneficial rates in DTAA) would negatively impact the prospects of the industry as DTC VAS, software imports and other such services utilized by the Indian Gem and Jewellery Industry, are categorized under payments in the nature of royalty and FTS.

Introduction of Commodity Transaction Tax (CTT) on sale of non-agricultural commodities (which would include gold and other precious metals) at 0.01% is also not good for the industry.

Meanwhile, basic Custom Duty on pre-forms of precious and semi-precious stones (other than diamonds) reduced from 10 to 2 percent would benefit the industry, said Dr. Suresh Surana.

Concessional rate of tax of 15% on dividend received from its foreign subsidiary proposed to continue for one more year is a positive step. Corresponding amendment to remove cascading effect on subsequent dividend distributed by Indian Company likely to help gems and jewellery industry in the country, concluded Dr. Sursh Surana.

Duty free limit on import of jewellery under the Baggage Rules increased to Rs. 50,000 in case of male passenger and Rs. 1,00,000 in case of a female passenger subject to conditions is a welcome step.