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Every gold jewellery piece sold at retail in India must carry a six-digit BIS Hallmark Unique Identification (HUID) mark alongside the BIS logo, purity grade, and AHC identification, compulsory from 16 June 2021 and HUID-mandatory from 1 April 2022. Jewellers submit batches of pieces to Assaying and Hallmarking Centres, receive per-piece HUID manifests, and are billed a per-piece hallmarking fee (a few tens of rupees per piece) at 18% GST as an inward supply of services. The reconciliation surface — AHC invoice against internal batch register against HUID capture in inventory master against per-piece amortisation into SKU cost of goods against Rule 42 ITC treatment — has piece-level granularity: at a mid-sized retail chain running 40,000 to 100,000 pieces a month, a single missed HUID or a single duplicate assay charge is a needle in a haystack that only structured reconciliation surfaces reliably.
Anchor the reconciliation on the HUID as the primary key. Batch flow: the jeweller's despatch note lists piece descriptions and SKU codes and internal batch reference for the lot sent to the AHC; the AHC returns a piece-level manifest listing HUIDs against piece descriptions and a batch tax invoice at 18% GST; the jeweller's receiving process cross-checks the AHC piece count against the despatch count, imports the HUID manifest into the inventory master keyed by SKU, and books the batch invoice as an inward supply. Cost allocation: the AHC batch fee is divided by the number of pieces in the batch and the per-piece hallmarking cost is capitalised into the SKU work-in-progress or finished-goods inventory value under Ind AS 2. ITC treatment: the 18% GST on the AHC invoice flows into the electronic credit ledger and is available under Section 16, subject to Rule 42 reversal only where the jeweller makes exempt supplies (rare in mainstream retail). Monthly close: the controller runs an AHC-invoice-to-batch-register reconciliation, a HUID-inventory-master reconciliation, and a hallmarking-fee-to-SKU-cost reconciliation, with exceptions routed to a controller review queue.
AHC master: AHC identification code, GSTIN, PAN, address, recognition status, per-piece base fee, expedited-turnaround premium rate. Batch master: internal batch reference, despatch date, piece count, SKU codes covered, karat purity declared, AHC destination, expected turnaround. HUID inventory master: six-digit HUID, SKU code, karat purity reported, piece weight, batch reference, receipt date, per-piece hallmarking cost, capitalised inventory carrying value, sale-invoice reference (nullable until sold). AHC invoice master: invoice number, invoice date, batch reference, piece count billed, base fee amount, premium charges, taxable value, CGST, SGST, GSTIN of AHC, GSTR-2B reflection status. Reconciliation registers: (i) despatch-count to AHC-billing-count variance; (ii) HUID manifest to inventory master ingestion status; (iii) purity declared vs purity reported exception; (iv) ITC availed vs GSTR-2B reflection; (v) SKU-cost amortisation vs finished-goods inventory valuation.
A monthly reconciliation pack: AHC invoice-level exception list (batch count, purity, premium charges, GSTIN mismatch); HUID inventory master completeness report (HUIDs marked and billed vs HUIDs received into inventory); per-piece hallmarking cost allocation to SKU with amortised value and residual variance; Rule 42 reversal working (nil for entirely taxable output, calculated for mixed taxable-exempt); Section 54(3) inverted-duty refund working including hallmarking service in Net ITC numerator; sale-invoice-to-HUID traceability report for pieces sold in the month with cost of goods sold recognised at the per-piece cost including the amortised hallmarking fee; ageing report for pieces hallmarked but not sold within the standard inventory window, feeding into slow-moving-stock provision under Ind AS 2 paragraph 28.
A regional jewellery chain’s manufacturing controller opens the AHC-invoice register for the quarter ending 30 June 2026. The Assaying and Hallmarking Centre in Bengaluru has issued 42 batch invoices covering 187,340 pieces at a per-piece hallmarking fee of ₹45 plus 18% GST, aggregating to ₹99.44 lakh of hallmarking service value with ₹17.90 lakh of GST. The despatch-note register for the same quarter shows 187,220 pieces despatched to the AHC — a delta of 120 pieces, or 0.064% of the quarter’s throughput. At per-piece cost the delta is under ₹5,400 of hallmarking fee, and at first glance it looks like a rounding error worth deferring to year-end audit. But the 120 pieces include 47 HUIDs that never made it into the inventory master, 62 HUIDs that were duplicated across two batch invoices (billed twice for the same piece), and 11 HUIDs that reflect purity downgrades from 22K declared to 21.8K assayed. The reconciliation is not about the ₹5,400 — it is about the operational integrity of a piece-level cost trail that flows into cost of goods sold across 187,340 finished-goods records. This is BIS hallmarking charges cost accounting jewellery India at production granularity, and the reconciliation discipline that resolves it is what separates a clean Ind AS 2 inventory valuation from a qualified audit opinion at year-end.
Quick reference
| Aspect | Detail |
|---|---|
| Compulsory hallmarking effective date | 16 June 2021 (BIS Order 15 June 2021 under BIS Act 2016) |
| HUID mandatory from | 1 April 2022 · six-digit unique identification per piece |
| Districts covered | Phase I 288 · Phase II +51 (Apr 2022) · Phase III further extended (Sep 2023) |
| Assaying and Hallmarking Centre GST | 18% GST on hallmarking service (SAC Chapter 99) |
| ITC availability | Section 16 CGST — full ITC subject to Rule 42 reversal for exempt-supply component |
| Inventory accounting | Ind AS 2 para 10 — cost of bringing inventory to saleable condition, capitalised to inventory |
| Section 54(3) inverted-duty refund | Hallmarking service (18%) included in Net ITC against 3% jewellery output supply |
| AHC-invoice-to-batch reconciliation | HUID-anchored piece-level primary key |
| BIS regulatory framework | Hallmarking of Gold Jewellery and Gold Artefacts Regulations 2018 |
| TDS classification | Section 393(1) Sl. 4 code 1001/1023 (legacy 194C) or Sl. 15 code 1005 (legacy 194J) — depends on AHC agreement |
The reconciliation in one paragraph
A jeweller submits a batch of pieces — say, 500 gold rings of a single SKU from a wedding collection — to an Assaying and Hallmarking Centre. The AHC assays each piece, verifies the purity grade (14K, 18K, or 22K), marks the piece with the BIS logo, the purity grade, its own AHC identification, and a six-digit Hallmark Unique Identification (HUID), and returns the batch to the jeweller with a piece-level manifest listing every HUID against every piece description. The AHC issues a tax invoice for the batch at a per-piece hallmarking fee (illustratively ₹45 per piece) plus 18% GST as an inward supply of services under SAC Chapter 99. The jeweller’s receiving process cross-checks the AHC piece count against the despatch count, imports the HUID manifest into the inventory master keyed by SKU, capitalises the per-piece hallmarking cost into the finished-goods inventory value under Ind AS 2 paragraph 10, and takes the 18% GST as input tax credit under Section 16 of the CGST Act. At the point of retail sale the point-of-sale reads the HUID from the piece tag, retrieves the SKU cost including the amortised hallmarking fee, and computes the gross margin. The AHC-invoice-to-batch-register reconciliation, the HUID-manifest-to-inventory-master reconciliation, and the hallmarking-fee-to-SKU-cost reconciliation are the three linked reconciliations that resolve every month at the manufacturing close and every quarter at the tax close.
What the AHC-jeweller flow actually looks like in India
Walk into the manufacturing division of a national jewellery chain in Andheri East, Mumbai, on a Tuesday morning. The dispatch coordinator on the mezzanine floor has assembled a batch of 500 22-carat gold rings from the day’s production — 320 from a single wedding-collection SKU, 180 across three engagement-collection SKUs. The rings are logged into a despatch note against internal batch reference BATCH-2026-06-274, sealed into a tamper-evident pouch, and courier-delivered to the recognised Assaying and Hallmarking Centre in Zaveri Bazaar under BIS licence.
The AHC receives the pouch, assigns its own internal batch tracking code, and moves the batch through the assay line. Each piece is spectrometer-tested for gold fineness, the actual purity is compared against the declared 22K (91.66% fineness — BIS specification 916), and pieces within the tolerance band pass to the marking station. Pieces below the tolerance either fail (returned to the jeweller for re-work) or are downgraded (marked at the lower actual purity — 21.8K, 21.5K — and the jeweller may accept or reject the downgrade). Passing pieces are laser-marked with the BIS logo, the purity mark (916), the AHC identification code, and the six-digit HUID unique to that piece. The marked pieces are packed back into a return pouch with a piece-level manifest — a CSV or PDF listing every HUID against the piece description and the purity reported. The AHC issues a tax invoice for the batch at (say) ₹45 per piece × 500 pieces = ₹22,500 base fee, plus 18% GST of ₹4,050 (CGST ₹2,025 + SGST ₹2,025), invoice total ₹26,550.
The pattern repeats across the national jewellery supply chain — the manufacturing arms of Tanishq (Titan), Kalyan Jewellers, Malabar Gold & Diamonds, Senco Gold, Joyalukkas, Reliance Jewels, and every regional and family-run manufacturer working out of Zaveri Bazaar, T. Nagar, Karol Bagh, Sultan Bazaar, and Coimbatore Rathinapuri all follow the same AHC submission cycle. Batch sizes range from a few dozen pieces for boutique studios to several thousand pieces per batch at national-chain manufacturing hubs. Some chains run captive AHC arrangements — a dedicated AHC operating on the chain’s premises under BIS licence, with volume-priced per-piece fees. Others use third-party AHCs on a per-batch basis. Either way, the invoice-to-HUID-to-inventory reconciliation surface is identical.
The BIS regulatory overlay — Section 14, Section 16, and the HUID mandate
The Bureau of Indian Standards Act 2016 gives the Central Government the power to notify goods that must bear the Standard Mark. The gold-jewellery hallmarking order, notified on 15 June 2021 under Section 14 of the BIS Act, made hallmarking compulsory across 288 districts from 16 June 2021 (Phase I). Phase II extended the mandate to 51 additional districts from 4 April 2022, and Phase III extended it further from 8 September 2023 — the mainstream retail market in India is now covered. From 1 April 2022, every hallmarked piece must carry a six-digit HUID mark alongside the BIS logo, the purity grade, and the AHC identification — the HUID scheme is the traceability layer that lets consumers, retailers, and the regulator identify individual pieces through the supply chain.
Section 16 of the BIS Act authorises BIS to grant licences to Assaying and Hallmarking Centres — the operating layer between the jeweller and the regulatory mark. AHC recognition is a formal licensing regime with equipment specifications (spectrometer accuracy, weighing balance calibration, laser marking systems), personnel qualifications (assay chemists, technical staff), and premises-and-process audits. AHC fees are notified separately by BIS and revised periodically — the current schedule reflects a per-piece charge irrespective of piece weight for standard jewellery categories, with additional charges for expedited turnaround, special-request assay (for example, X-ray fluorescence versus fire assay for higher-precision categories), and re-hallmarking of pieces returned for re-work.
The Hallmarking of Gold Jewellery and Gold Artefacts Regulations 2018 flesh out the operational framework — the assay procedure, purity grades (14K, 18K, 20K, 22K, 23K, 24K), fineness declaration format, HUID assignment protocol, jeweller registration process, AHC recognition process, and the schedule of fees. Retailers must register with BIS at the retailer level and hold a BIS registration number that appears on their premises signage and their tax invoices. Manufacturers similarly register at the manufacturing level. The registration is the entry criterion for submitting pieces to an AHC — an unregistered jeweller cannot obtain hallmarking.
The Rule 42 and Section 54(3) overlay — ITC and inverted-duty on hallmarking service
The 18% GST on the AHC invoice is an inward supply of services under SAC Chapter 99 (professional and technical services). The jeweller books the invoice in its books of accounts as an inward supply, takes input tax credit on the 18% GST under Section 16 of the CGST Act (subject to the standard conditions — tax invoice held, service received, GSTR-2B reflection, supplier has paid tax to government), and the ITC flows into the electronic credit ledger. Because the jeweller’s output supply of gold jewellery is at 3% under HSN 7113 (Notification 1/2017-CTR Schedule V), while the hallmarking input is at 18%, the hallmarking service contributes to the inverted-duty structure that jewellers accumulate on their credit ledger.
Rule 42 reversal applies only where the jeweller also makes exempt or nil-rated supplies. In mainstream retail jewellery, output supplies are entirely taxable — the only meaningful exempt-supply overlay is old-gold exchange under Rule 32(5) (second-hand jewellery margin scheme, taxed on margin only), and Section 15(3) discount treatment on old-gold consideration. For jewellers running a pure new-jewellery retail operation, no Rule 42 reversal is required and the full 18% ITC on hallmarking service is available. For jewellers running a mixed new-plus-second-hand operation, the Rule 42 formula applies proportionally.
Section 54(3) inverted-duty refund covers the unutilised ITC under Rule 89(5) formula: Maximum Refund = (Turnover of inverted-rated supply × Net ITC ÷ Adjusted total turnover) − Tax payable on inverted-rated supply. Hallmarking service is included in the Net ITC numerator alongside other 18% inputs such as packaging boxes, dies, safety plates, showroom fittings, and cleaning chemicals. The refund cycle typically runs six to nine months from application, and the accumulated ITC ties up working capital in the meantime — a reason why the mixed-rate jewellery invoice reconciliation discipline matters at the same operating cadence as the hallmarking reconciliation.
A worked example — a national jewellery chain 500-piece gold-ring batch
A national jewellery chain (illustrative — modelled loosely on the manufacturing-to-retail flow used by Reliance Jewels and similar national chains) despatches a batch of 500 22-carat gold rings to a recognised AHC for hallmarking. The batch covers a single wedding-collection SKU launching for an upcoming trunk show.
Illustrative — public disclosures do not reveal AHC-invoice or SKU-level manufacturing cost detail; the figures below are representative of the operating pattern, not actual chain data. Cross-verify against your own AHC-invoice ledger and inventory-master extract before action.
The despatch-and-return cycle produces the following records.
| Record | Detail |
|---|---|
| Internal batch reference | BATCH-2026-06-274 |
| Despatch date | 3 June 2026 |
| Despatch piece count | 500 (22K gold rings, SKU RING-WED-A47) |
| AHC receipt date | 4 June 2026 |
| AHC assay outcome | 494 pieces assayed at 22K (91.66% fineness), 6 pieces downgraded to 21.8K |
| AHC return date | 6 June 2026 |
| AHC piece-level manifest | 500 HUIDs listed, 494 at 916, 6 at 912 |
| AHC tax invoice | Invoice AHC-BLR-2026-1847 dated 6 June 2026 |
| Per-piece hallmarking fee | ₹45 |
| Batch base fee (500 × ₹45) | ₹22,500 |
| CGST at 9% | ₹2,025 |
| SGST at 9% | ₹2,025 |
| Invoice total | ₹26,550 |
| ITC available | ₹4,050 (CGST + SGST) |
The jeweller’s receiving process cross-checks the 500-piece manifest against the 500-piece despatch note — variance nil. The 6 downgraded pieces trigger a purity-downgrade workflow: the SKU cost register is updated to reflect the actual 21.8K purity for those 6 pieces, and the retail-selling price is adjusted accordingly (or the pieces are returned for re-work at the karigar level and re-submitted to the AHC). The inventory system imports the HUID manifest and tags each of the 500 pieces with its HUID against SKU RING-WED-A47. The per-piece hallmarking cost is capitalised at ₹45 into the finished-goods inventory value for each piece — the SKU cost line for RING-WED-A47 includes gold value at day’s rate × piece weight, making-charges paid to the karigar, hallmarking fee ₹45, packaging allocation, and overhead allocation.
At the retail counter over the following weeks, the POS reads the HUID from the piece tag at each sale, retrieves the SKU cost including the amortised ₹45 hallmarking fee, and posts the cost of goods sold to the P&L against the sale invoice revenue. The 18% GST on the AHC invoice is available as ITC in the June 2026 tax period (subject to GSTR-2B reflection), and flows into the Section 54(3) refund working under Rule 89(5) alongside other 18% inputs from the period.
Now scale this to a manufacturing hub producing 40,000 pieces a month — roughly 80 batches of 500 pieces each. The monthly AHC-invoice register reflects ₹18 lakh of hallmarking service value with ₹3.24 lakh of GST at 18%. The HUID inventory master ingests 40,000 new records per month, tagged to SKU codes across 40 to 60 active collections. The AHC-invoice-to-batch-register reconciliation must resolve every batch against a despatch note, every HUID against an inventory-master record, and every rupee of hallmarking service against a per-piece cost allocation in the SKU cost register.
Three reconciliation findings surface from the manufacturing-hub monthly run in a typical mid-2026 period. First, one AHC invoice for BATCH-2026-06-181 bills for 512 pieces against a despatch note of 500 — the AHC has double-billed 12 pieces from a previous batch that was re-submitted for re-hallmarking after purity re-work, and the double billing is corrected by an AHC credit note. Second, 23 HUIDs from BATCH-2026-06-234 did not make it into the inventory master ingestion — a manifest-file parsing error dropped the last 23 rows on that CSV, and the finished-goods inventory shows 477 pieces against a hallmarked count of 500; the exception is resolved by a manual re-import. Third, the AHC premium charge for expedited turnaround on BATCH-2026-06-089 (a ₹5 per-piece premium × 500 pieces = ₹2,500) was posted to the base fee bucket rather than the premium bucket, and the SKU cost allocation absorbed the premium at the base rate; the correction pushes ₹5 into each of the 500 SKU cost records without changing the total inventory value but restoring the traceability of the premium charge for the trunk-show trunk-line financial analysis.
Common reconciliation breakages
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Despatch-count vs AHC-billing-count variance without a per-batch reconciliation. Jewellers who post AHC invoices to accounts payable on a value-only basis miss batch-level piece count variances. A 12-piece over-billing on a 500-piece batch is 2.4% of the invoice value — a small number in isolation, but when it recurs across 80 batches a month it compounds.
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HUID manifest ingestion failures that leave pieces marked but untraced in inventory. A parsing error on the AHC CSV, a manual re-key gap, or an inventory-system character-limit truncation on the HUID field can drop HUIDs silently. Pieces then physically exist in the vault with a valid BIS hallmark but no inventory-master record — they are physically saleable but system-invisible.
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Purity downgrade not flowing to SKU cost or retail price. When the AHC assays a piece below the declared purity and downgrades it, the SKU cost basis and the retail price should both adjust. Jewellers who continue selling the downgraded piece at the higher declared price expose themselves to consumer-complaint risk under the BIS regulations and mis-state their gross-margin calculation.
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Expedited-turnaround premium absorbed into base rate. Batch invoices that carry a premium line for same-day or next-day turnaround should have the premium allocated to a distinct cost bucket. Absorbing the premium into the base per-piece rate under-states the operational-priority premium the jeweller pays for launch-timing collections.
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ITC availed lagging GSTR-2B reflection by a filing cycle. The AHC’s GSTR-1 filing reflects the invoice in the tax period of issue, and GSTR-2B mirrors that in the same period. But if the jeweller’s receiving process posts the invoice to books in the next month (because the batch return arrived at month-end and processing spilled into the next period), the ITC availment lags GSTR-2B by one cycle — surfacing as a GSTR-2B-to-books ITC variance under GSTR-2B reconciliation discipline.
How a reconciliation platform handles this
Terra Insight’s reconciliation platform (TransactIG) treats every AHC-invoice-to-batch-to-HUID flow as a three-way match — AHC tax invoice against jeweller despatch note against HUID manifest ingestion into the inventory master. The platform’s multi-way matching engine cross-references the batch-level records, surfaces piece-count variances, HUID drop-outs, purity downgrades, and premium-charge allocations as exceptions for controller review at the manufacturing close, and threads the per-piece hallmarking cost through to the SKU cost register capitalised under Ind AS 2. Jewellers running the platform typically move from 51% first-pass match to 88% first-pass match on the AHC-invoice-to-HUID-to-inventory-master reconciliation, with the residual routed to structured exception workflow. The commercial pillar for the category is jewellery reconciliation software India, and the broader reconciliation software India hub anchors the cross-category architecture.
For jewellers integrating the hallmarking-cost discipline with adjacent flows, the mixed-rate jewellery invoice reconciliation article covers the 3% + 5% + 18% GST split on the retail-invoice side; the karigar workshop labour TDS article covers the making-charges side; the wastage and loss reconciliation article covers the metal-loss overlay through the same manufacturing period; the gold scrap RCM article covers the unregistered-supplier RCM leg on scrap purchases; the EMI-scheme revenue recognition article covers the customer-financing overlay; the damaged-return credit note article covers Section 34 credit notes on returns; and the deposit gold scheme customer liability article covers the customer-deposit tracking side. The job-work vs 194Q classification article frames the AHC-agreement TDS classification test between Section 393(1) Sl. 4 and Sl. 8, and the metal loan gold-price fixation article covers the delivery-day-versus-invoice-day reconciliation for the underlying metal.
The five FAQs below address the operational questions Indian jewellers ask most often when implementing structured AHC-invoice reconciliation.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Bureau of Indian Standards Act 2016 — Section 14 and Section 16 — Compulsory certification. Section 14 empowers the Central Government to notify goods that must bear the Standard Mark by order in the Official Gazette; Section 16 authorises BIS to grant licences to Assaying and Hallmarking Centres. The gold-jewellery hallmarking order notified on 15 June 2021 (effective 16 June 2021) made hallmarking compulsory in 288 districts in Phase I; extended to 51 additional districts in Phase II (4 April 2022); further extended in Phase III (8 September 2023). Six-digit HUID mark on every piece is mandatory from 1 April 2022.
- ▸ Hallmarking of Gold Jewellery and Gold Artefacts Regulations 2018 — BIS regulatory framework. Governs the assay procedure, purity marking (14K/18K/22K), fineness declaration, HUID assignment, jeweller registration process, AHC recognition, and the schedule of fees payable by the jeweller to the AHC per piece. Fees are notified separately and revised periodically by BIS; the current schedule reflects a per-piece charge irrespective of piece weight for standard jewellery categories, with additional charges for special-request assay or expedited turnaround.
- ▸ Rule 42, CGST Rules 2017 — Manner of determination of input tax credit in respect of inputs or input services and reversal thereof. Where the registered person uses inputs or input services partly for effecting taxable supplies (including zero-rated) and partly for effecting exempt supplies, the ITC attributable to the exempt component is reversed proportionately. Hallmarking service invoiced by the AHC at 18% GST is an input service consumed by the jeweller in the manufacture of taxable output supply of jewellery (HSN 7113 at 3%); the ITC is fully available where the output supply is entirely taxable, and reversed under Rule 42 only where the jeweller also makes exempt or nil-rated supplies.
- ▸ Section 16 and Section 17, CGST Act 2017 — Eligibility and conditions for taking input tax credit. Section 16(2) requires the registered person to be in possession of a tax invoice, the goods or services to have been received, the tax to have been paid to the government by the supplier, and the return to have been furnished. The AHC tax invoice for hallmarking service at 18% GST is the primary document; ITC is available in the tax period in which the invoice appears in GSTR-2B, subject to Section 17(5) restrictions where the input service is used for non-business or blocked purposes.
- ▸ Ind AS 2 — Inventories (para 10 to 22) — Cost of inventories. The cost of inventories comprises all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. Hallmarking is a mandatory cost incurred in bringing gold jewellery inventory to a saleable condition under Indian law from 16 June 2021 onwards, and therefore forms part of the cost of finished goods inventory under Ind AS 2. The per-piece hallmarking fee is capitalised into the SKU cost of goods carrying value, not expensed to the profit and loss statement in the period of AHC billing.
- ▸ Section 393(1) Sl. 15, Income-tax Act 2025 (payment code 1005) — Professional services TDS. Successor to legacy Section 194J at 10% (2% for technical services / limited categories). Where the AHC is treated as a professional service provider under the Section 194J framing rather than a job-work contractor under Sl. 4, the jeweller deducts TDS at the applicable rate on the pre-GST hallmarking fee subject to the annual threshold per deductee PAN. The classification test — professional service (Sl. 15) versus works contract (Sl. 4) — depends on the AHC agreement structure; most AHC billings fall under the works-contract framing at Sl. 4 code 1001/1023 (legacy 194C) at 1% or 2%.