Jewellery traders and manufacturers across the country had gone on strike for two days but called it off on March 4 after the clarification was issued.
However, the clarification contains one anomaly, which is expected to affect business, sources said in Mumbai.
The notification states that jewellers who get ornaments made by goldsmiths and affix a logo, or jewellers who mark ornaments for identification, are not subject to tax.
However, if a jeweller advertises and sells products under a brand, and puts the same brand name or an abbreviation thereof or a mark, which has a connection with such a brand name, on the article of jewellery, it would be considered a branded jewellery and will be taxed.
Bullion consultant Madhusudan Daga points out that this would hit business in that players would not be able to advertise, as their products would then be considered branded.
"Advertisements especially during festival seasons such as Diwali and Dussera would not be easy any more. In fact, not only television advertisements, but also banners and hoardings would be taken into account. This form of advertising is popular in the southern states," he said.
On March 4, traders from Maharashtra made a representation to the Union minister for consumer affairs, Sharad Pawar, on the issue. Pawar then acted to get the clarification issued, said sources.
Pawar reportedly assured the trade that the government was keen to promote hallmarking of gold to maintain quality standards.
According to market sources, the Gem and Jewellery Export Promotion Council also raised the issue with the government departments concerned in Delhi in view of the trade protest.
Sources said the industry would approach the Centre once again to rectify the anomaly.