IBJA Warns Gold Traders Against Credit Sales

According to the trade body, many jewelers are likely to be burdened with significant tax payment in this financial year.

SEATTLE (Scrap Monster): The India Bullion and jewelers Association (IBJA) has issued a warning to manufacturers and wholesale dealers of gold jewellery against supply of products on credit to jewelers.

According to the trade body, many jewelers are likely to be burdened with significant tax payment in this financial year. This could lead to non-payment by them to manufacturers and wholesalers.

IBJA highlighted the government announcement stating its intention to recover approximately INR 2.5 lakh crores as income tax on post-demonetization cash deposits in banks during fiscal 2020, using the recently launched tax amnesty scheme. As per industry estimates, almost one-fifth of this amount is expected to come from the gold trade. Under these circumstances, IBJA urged gold traders to request for post-dated cheques against payments receivable from jewelers. In addition, IBJA also urged banks to be cautious on lending money to gold traders.

In a related move, IBJA has also requested a stay on recovery orders from IT department. Such orders could lead to frauds and bankruptcies in country’s jewellery industry, IBJA observed. It must be noted that the IT department had issued recovery notices to thousands of jewelers over cash gold sales.

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