Jewellers pay a lumpsum amount as advance tax on presumption of sales during the January-March quarter and compensatory tax, if any, from the previous three quarters of the current fiscal year. This year, the tax component is expected to rise significantly due to a sharp spike in gold prices.
The income tax department has started asking jewellers to pay advance tax on increased value of stock due to a surge in gold prices.
“It is a double whammy for jewellers as sales have come to standstill due to fear of coronavirus and high volatility in gold prices. The decline in sales has created a liquidity problem for jewellers. At the same time, they will have to pay advance tax on increased value of stocks. So, it’s a double blow for us,” said Anantha Padmanabhan, managing director, NIC Jewellers, a Chennai-based jewellery retailer and chairman of Gems and Jewellery Domestic Council (GJC).
Gold prices have risen by a significant 25 per cent since September to trade currently at Rs 41,000 per 10 g (Saturday). Standard gold in Mumbai’s Zaveri Bazaar corrected after hitting a record high of around Rs 44,000 per 10 g on Saturday. Similarly, silver also fell by Rs 1,500 to trade at Rs 42,600 per kg.