With Goods and Services Tax (GST) becoming effective in July 2017, the gold jewellery business is one of the biggest sufferers as most of this business used to be transacted without any paperwork in the past. Jewellers were not in a habit of keeping a stock register and often, the stock available with them was significantly more than what they showed on papers. This surplus stock was what was sold off by them at a premium on the night of demonetisation.
Now, this surplus stock has become a headache for these jewellers, as the GST regime prohibits them from keeping jewellery and gold above the stocks they declared on the midnight of July 31st. India Today has learned that in the past couple of months, lot of jewelers have been quietly shifting their surplus stock of jewelry and gold to bank lockers. This was revealed when there was a sudden spike in the number of lockers hired at the bank branches close to the major jewellery markets of Agra.
According to the information, a lot of jewellers in the city were conducting business transactions worth crores, but their billing was less than 10 per cent of their business. With the advent of GST, these unbilled business transactions have stopped and the jewelers who have submitted their GST returns , are unable to keep any jewellery stock over what they have displayed in the return. As the excess stock could create discrepancies in the return they are filing, all of it has been shifted to secure locations, including bank lockers.
Although the government has been lenient this month with the jewellers, the festival season has started and with the predictions of a huge loss of revenue for the government due to GST refunds, the jewelers fear that the government could resort to pressure tactics for revenue collections, including surveys and raids at jewelry shops. If any excess stock is found at the shop during the raid, it could be registered as a serious offense by the government and the jeweler could even be sent to jail for it.
A bank official confirmed that there has been a sudden upsurge in the demand for lockers since the month of June 2017 and it is still continuing, which indicates that people are shifting a lot of valuables into these lockers.
A leading jeweler of Agra claimed that GST has given a lot of discretionary power to the tax officials which could be misused against the businessmen to extort money from them by the officials. Denying any such allegations, a senior Commercial Tax Official told India Today that the department has implemented a mobile team tracking system through which, the Zonal Commissioner of Commercial Tax will keep an eye on all the mobile teams of tax officials on a mobile app. If any complaints are filed against a particular mobile team, it could be easily verified and resolved at earnest.
Jewelers Association President Rajesh Hemdev said that the gold ornaments attract 3 per cent GST, but all this GST could be reclaimed if a bill has been issued. Earlier, there was 1 per cent VAT and 1 per cent excise on the ornaments, but there was no refund, so a lot of businessmen did their business off the books. The Association is encouraging these businessmen to start selling their ornaments after charging GST and issuing a valid bill and most of the businessmen are complying to this guideline.
UP Commercial Tax Commissioner Mukesh Meshram told India Today that all bills will be issued unique identification numbers so that each bill can be tracked. All these bulls will be submitted online to the Central Bill Collection Center of the Commercial Tax department. The bills can also be sent through email. Also, he said, in every two months, the tax assessment official will have to verify the GSTR-3 of the businessmen, so there was a big possibility that any discrepancy in the return filing and stock registers will be caught within a month of filing the return.