Indian Diamond Sector Says GST Will Aid Other Diamond Polishing Countries

(IDEX Online) – Indian diamond exporters are protesting that the government’s decision to impose a 0.25 percent tax on rough diamonds under the new Goods and Services Tax (GST) will impact the sector's competitiveness.

“Though the government has taken the move to make an audit trail in diamond trade, it will be a burden on us,” Russell Mehta, CEO of Rosy Blue told The Economic Times. “Imposition of GST on rough diamonds makes us less competitive as the margins are already under pressure. Getting refunds will take time. Sometimes it takes more than a year to get VAT refunds.

“We should focus on the big picture of making India a global diamond hub as outlined by the PM and popularize Indian jewelry across the world rather than get entangled in procedures for refund. It is difficult for gems and jewelry exporters to pay 0.25 percent and then initiate the process for refunds,” he said.

Exporters believe the GST on rough stones will give an advantage to other diamond polishing centers, such as China, Sri Lanka, Vietnam and Thailand which impose VAT on imported rough diamonds but not GST.

Gem & Jewellery Export Promotion Council (GJEPC) Chairman Praveen Shankar Pandya commented: “Diamonds are the key raw materials for the gem and jewelry business. Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive."