Jewellery manufacturers in Coimbatore have urged the Union government to change the way gold stock valuation is calculated for them for taxing purposes, as gold prices have increased 65 % between March 2025 and March 2026.

K. Muthuvenkatram, president of the Coimbatore Jewellery Manufacturers’ Association, told the media here on Tuesday that the closing stock value for the jewellery manufacturers and retailers is calculated based on weighted average cost of the gold stock available with them at the end of the financial year. With steep rise in price of gold, the value of the stock with the jewellery manufacturers and retailers has also increased.

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However, sales of jewellery have not increased in quantity because customers are unable to buy at such high prices. “Our turnover may be the same as last year because of the value of gold. But the quantity of gold sold is reducing. If we earn ₹85 as profit, we pay Income Tax of ₹130.

“The unrealised inventory appreciation is getting taxed. We cannot reduce the gold stock with us because we need to keep giving customers new designs and varieties. This issue has aggravated in the last two years because gold value has appreciated 146 % in the last three years,” he said.

Since the jewellery manufacturers are paying tax without actual sale of jewellery and proportionate cash flow, those in the micro and small-scale sector are under financial stress.

Rate of gold bullion (per gram) was ₹6,698 as on March 31, 2024, ₹8,881 as on March 31, 2025 and ₹14, 615 on March 31 this year. With the West Asia war continuing, experts say the price of gold will only go up in the coming months.

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This will further impact the micro and small-scale jewellery manufacturers.

Hence, the government should take separate statement of the gold stock with the manufacturers every year. It should collect advance tax based on the sales, he said.

Courtesy: The Hindu