The government is said to have cracked the whip on businesses across the country which had deposited cash in the aftermath of demonetisation in November 2016 but were unable to provide sufficient explanation to tax authorities.
The notice for the demand for additional tax has been sent to thousands of businesses across the country, many of who are said to be in the jewellery business, according to sources.
“All businesses which have deposited cash have got the notice. Whoever has not given justification, has been sent a notice on Tuesday,” multiple sources in the Income Tax Department told DH.
While the notices are said to be running into several thousands, CBDT sources say that about 1.5 lakh cases during note-ban were investigated for suspicious transactions.
However, experts say that it will not have a major impact on the industry, but the growth might be impacted as some of the “small-time jewellers” would have dealings with established players as well.
“The genuine and organised players — regardless of size — are unlikely to have been affected by such reported large scale irregular practices that tainted the industry’s image at the time of demonetisation. So, I don’t expect any significant impact on the industry. It might, on the contrary, help the growth of organised players. However, counter-party risks shoot up at such times and that could dampen sentiment further,” Somasundaram PR, managing director, India, World Gold Council told DH.
Industry sources estimate that there are around four lakh jewellers, of which, around 90,000 jewellers control about 50% of the sales in the Indian market.
