Indian Gems and Jewelry Industry Hopes For Tax Cap of 1.25%

(IDEX Online) – The Indian gems and jewelry industry is hoping the country's national Goods and Services Tax (GST) on finished jewelry will be no more than 1.25 percent rather than the proposed 4 percent, according to domestic media reports.

The trade is also asking for no GST on rough, cut and polished diamonds and colored gemstones since most of them are exported.

“There is only 1% VAT on finished jewelry today," Gems and Jewellery Export Promotion Council (GJEPC) Chairman Praveenshankar Pandya was cited as saying by The Hindustan Times.

"The status quo has to be maintained. On excise, there was an exemption limit of Rs 10 crore, which roughly covers 75 percent of the jewelers in India. So, we believe 1.25 percent is the right tax as it will be revenue neutral and the government won’t lose money on excise and VAT.”

There is no duty on imported diamonds. Most states impose value added tax (VAT) of 1 percent of the final sale price.

“India exports 93% of its diamond products," said Pandya. "Any adverse tax on the import of diamonds or the trading of cut and polished diamonds will hurt India.”

The Indian gems and jewelry industry is estimated to employ around 1 million people directly and 4.6 million semi-skilled workers in various areas. A higher taxation on the gems and jewelry sector may also hurt employment, Pandya said.

The All-India Gems and Jewellery Trade Federation has also proposed a minimal GST rate of 1.25% on gold and jewelry. “The proposed rate of 4% will hamper the growth of the industry. It will also result in a drop in tax compliances and will encourage smuggling,” the trade body said.