Jewellers hail GST slash to 0.25 percent on diamonds and gemstones

The gems and jewellery industry has welcomed the Goods and Service Tax Council’s decision to lower the GST on diamonds and precious gemstones to 0.25% from 3%. The working capital requirement is quite high in this industry which imports near about 95% of its diamonds and exports over 90% of polished diamonds. The announcement from GST Council is expected to offer much-needed reprieve to the jewellers, feel the experts. The decision by the GST Council is also likely to boost diamond jewellery sales in the domestic market.

According to unofficial trade estimate, due to 3% GST on polished stones, working capital worth Rs. 5,000 crore is locked up as exporters used to await refund of the tax only after the diamonds were exported. According to the industry expert, every diamond in India goes through an elaborate chain of manufacturing process which involves 10 levels and 3% GST at each level adds up to the working capital requirement.

“This decision by GST Council will certainly support the SMEs of the sector and small players including brokers, agents, and traders to function smoothly without blockage of working capital. Looking at the six million plus jobs that this sector accounts for and the 43.2 billion dollar exports out of the country, this cut in GST rate will definitely help the industry to grow further. Given the high price of the products where around 80% – 95% of the content is imported component and more than 90% being exported, this will be a great boost to the Indian Gems and Jewellery industry. Reforms like these will help India become a global leader in Gems and Jewellery,” says Pramod Agarwal, chairman, GJEPC.

Jewellers have also hailed the reduction in GST on diamonds and gem stones. But, some require clarity. “The reduction in GST for loose diamonds and colour gem stones is a step in the right direction. But the rate for GST continues to be the same 3% for gold jewellery and its making. We now await a reduction in the GST rate for jewellery as that would encourage compliance and bring more revenue to the government coffers,” says Ishu Datwani, founder, Anmol Jewellers, Mumbai.

However, Vaibhav Saraf, director of Aisshpra Gems and Jewels wants more clarity on the GST on diamond-studded jewellery from the government after the rate slash. However, he feels that it will boost the sale of solitaires.

Some jewellers feel that rate cut will augur well both at the trade and consumer level. “The reduction of GST will immensely help B2B diamond trade for domestic as well as export business. It will also encourage sale of diamond jewellery, loose diamonds and coloured stones at retail level, says Aditya Pethe, director, WHP Jewellers.

Courtesy: Retail Jeweller India News Service