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Mumbai diamond trade tangles in the cobwebs of Octroi
21 May '08
2 min read
A battle between diamond traders and Brihanmumbai Municipal Corporation (BMC) over payment of octroi seems to have been going on relentlessly for quite some time now.
While inept method of octroi collection is harassing diamond merchants, BMC prefers to stay inactive at the background. But unfortunately, it is only the diamond business which is facing the consequences making trade difficult in Mumbai.
Octroi is essentially a local tax collected by the municipality on goods brought into a district for consumption. Presently, it is pegged at 2 percent but traders have been struggling to bring it down.
Besides, out of the 4,000 diamond merchants, only 5 percent have been enlisted with the BMC which implies that octroi is not applicable on all transactions between traders and only a handful of them end up paying the tax generating as much as Rs40-50 million.
According to experts the total value of diamond imports is roughly Rs40,000 million. Jewelers have opined that if one paisa was collected for every Rs0.001 million of this value, it could help the BMC recover the octroi revenues. However, the BMC did not accept this proposal.
States like Gujarat and Rajasthan have completely got rid of this tax system on diamonds which makes Mumbai less attractive even domestically.
Mr Sanjay Kothari, Chairman of Gem and Jewellery Export Promotion Council (GJEPC) told Fibre2fashion, “We do not object from paying octroi but it should be 0.10 percent as imposed on gold but even this is not being considered by the BMC.”
It is quite obvious that if it continues this way, the octroi duty structure will prove to a major hurdle in the way of making Mumbai a diamond trading hub.
While inept method of octroi collection is harassing diamond merchants, BMC prefers to stay inactive at the background. But unfortunately, it is only the diamond business which is facing the consequences making trade difficult in Mumbai.
Octroi is essentially a local tax collected by the municipality on goods brought into a district for consumption. Presently, it is pegged at 2 percent but traders have been struggling to bring it down.
Besides, out of the 4,000 diamond merchants, only 5 percent have been enlisted with the BMC which implies that octroi is not applicable on all transactions between traders and only a handful of them end up paying the tax generating as much as Rs40-50 million.
According to experts the total value of diamond imports is roughly Rs40,000 million. Jewelers have opined that if one paisa was collected for every Rs0.001 million of this value, it could help the BMC recover the octroi revenues. However, the BMC did not accept this proposal.
States like Gujarat and Rajasthan have completely got rid of this tax system on diamonds which makes Mumbai less attractive even domestically.
Mr Sanjay Kothari, Chairman of Gem and Jewellery Export Promotion Council (GJEPC) told Fibre2fashion, “We do not object from paying octroi but it should be 0.10 percent as imposed on gold but even this is not being considered by the BMC.”
It is quite obvious that if it continues this way, the octroi duty structure will prove to a major hurdle in the way of making Mumbai a diamond trading hub.
Fibre2fashion News Desk - India
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