- February 27, 2020
- Posted by: admin
- Category: Daily News
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- Indian jewellers have received surprise tax notices asking them to turn over money they made from customers who scrambled to buy gold after Prime Minister Narendra Modi’s 2016 ban on high-currency notes, according to a dozen jewellers and tax officials.
- When Modi announced demonetization on 8 Nov 16 to weed out undeclared cash, clients thronged the store of one Mumbai-based jeweller, clamouring for necklaces, rings, bullion – anything gold.
- The jeweller – who asked to only be identified by his surname, Jain, to avoid retribution – said he sold his entire stock at a steep premium and pocketed revenue usually earned in two weeks.
- In Nov 19, he received a tax notice asking for the source of those earnings and ordering him to turn in all revenue made that night, under suspicion that black money was behind the purchase.
- Jain appealed against the order, but as per Indian law had to deposit 20% of the disputed amount.”If we lose the case, then we have to close the business to pay the remaining amount,” said Jain.
- Mehta estimated tax authorities are seeking around INR500bn (USD7bn) from people in the gems and jewellery sector.
- “This could create a problem for the industry in the long run as those who need to pay 20% to appeal may have to purchase bullion or jewellery on credit,” said Mehta. If they lose their cases, the jewellers could default on the loans, potentially hurting suppliers and bankers, he said.
- Tax authorities are within rights to demand tax on past revenue, which takes time to scrutinise, but it is highly unusual for officials to demand the entire revenue as tax.
- A tax official based in Kolkata, likened the exercise to “being asked to dig up a dead body after three years, find out how the person died and catch the killer.”
27-Feb-2020
