New DTC brings relief to jewellers

MUMBAI: The revised Direct Tax Code (DTC) has removed a clause that gave wide powers to investigating officers conducting raids on jewellers, thus bringing relief to the industry, said a chartered accountant and a leading trade body.

The draft DTC allowed investigation officers to seize any bullion, precious or semi-precious stones or jewellery if they detected unaccounted stock on a jeweller’s premises. This was done mainly to keep a tab on black money flows. The DTC Bill 2010 was tabled in Parliament on Monday.

According to the All India Gems and Jewellery Trade Federation (GJF), such confiscation would have disrupted their manufacturing process. “GJF had a meeting with the Ministry of Commerce last month in which this point was stressed and fortunately for us, the revised DTC has removed the provision relating to seizure of stock-in-trade of jewellery, bullion and precious stones,” said C Vinod Hayagriv, chairman of GJF.

“It was discriminatory against the sector and seizure of any stock-in-trade as per the section would have created a lot of practical difficulties in payment of taxes,” said chartered accountant Bhupendra Shah.

“Stock is the only item which can be disposed of to pay tax.”

Section 139 (2)(f) of DTC 2009 provided, “The authorised officer shall have all the powers to seize any stock in trade of bullion, precious or semi-precious stones or jewellery, found as a result of such search.”

Under the DTC Bill 2010, clause 135(2) deals with powers of an authorised officer during raids. The provision relating to seizure of stock-in-trade of jewellery, bullion and precious stones has been removed from Clause 135(2).

The Income-tax Act of 1961 was silent on seizure of stock-in-trade up to 2003. But the Act was amended in June that year to read “provided that bullion, jewellery or other valuable article or thing which are stock-in-trade of the business cannot be seized.”