New Delhi, May 7 (IANS): Finance Minister Pranab Mukherjee Monday said the government had withdrawn the levy of one percent on the sale of unbranded jewellery initially proposed in the Finance Bill, 2012-13.

"A proposal that has attracted public attention is the implementation of central excise duty on the unbranded precious metal jewellery at the rate of one percent. I would like to reiterate that this (levy) was well intended and introduced not so much for raising revenues but for rationalisation and movement towards the goods and services (GST) tax," Mukherjee said in the Lok Sabha while initiating a debate on the Finance Bill, 2012-13.

"But the outpouring of sentiments inside and outside the house has indicated that we are not ready for it and the government has decide to withdraw the levy on the branded and unbranded jewellery as from March 17, 2012."

Earlier, thousands of jewellers across India had gone on a 21-day strike after Mukherjee in his proposals for the union budget, 2012-13, had proposed one percent excise duty on unbranded jewellery and doubled the import duty to four percent on gold.

The strike came to an end after the jewellers were assured of a duty rollback from Mukherjee and Congress president Sonia Gandhi.

Mukherjee increased the transaction limit in tax deducted at source (TDS) of one percent on all cash transaction exceeding Rs.2 lakh.

"To cut the flow of unaccounted money in the jewellery trade, the Finance Bill had proposed the collection of tax at source by the seller at the rate of one percent from the sale amount of one percent from the buyer for all cash transaction exceeding Rs.2 lakh," Mukherjee said.

"Responding to the representation made by the industry that this will cause undue hardship, I proposed to raise the TDS from cash purchase on jewellery from Rs.2 lakh to Rs.5 lakh."

However, Mukherjee retained the one percent TDS on cash transaction for bullion at one percent.

"The threshold limit for the cash purchase of bullion the TDS shall be retained at Rs.2 lakh. However, it is being clarified that bullion will not include any coins or other articles within 10 grams or less than that."