PRAVEENSHANKAR PANDYA Chairman, GJEPC
With respect to 0.25% GST on rough diamonds, Council feels that taxing diamonds is a retrograde step and not in sync with equivalence policy. Diamonds are key raw materials for gem and jewellery exports business. Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive. In sync with the Prime Minister’s directives, gems and jewellery exporters have to focus on the big picture of making India a global diamond hub and popularise Indian jewellery across the world rather than get entangled in procedures for refund. It is difficult for gems and jewellery exporters to pay tax of 0.25% and then initiate process for refunds, etc.
For a segment wherein 95% of the output is exported, and, whose global footprint is under constant stress from other competitive economies, an upfront levy of GST on rough imports, which was hitherto exempted, would invariably cause a major setback to the trade and impact India’s significance in the global markets. Owing to the thin margins in the segment, each business will have to re-evaluate the viability of conducting the cutting and polishing activity in India, in light of the extent of strain GST would bring on its working capital, and, eventually, this may lead to significant volume of flight of capital and employment to other jurisdictions.
We request the government to reconsider its decision of taxing rough diamond imports under GST, owing to such severe repercussions.
We welcome the government’s move of keeping a GST rate of 3% on gold and jewellery and this is in line with our representations and recommendations.
With regard to implementation, we also urge the government to grant the following: 1. Transactions carried out through the Diamond Dollar Accounts (DDA) should be nil-rated 2. Local transactions in respect of rough as well as polished diamonds, for the purpose of or in furtherance of exports, should be exempted from GST 3. Import of gold, platinum and silver as input (from the nominated agencies/ banks/foreign buyers) for the purpose of manufacture and export of gold/platinum/silver jewellery should be exempted from Integrated Goods & Services Tax (IGST) and GST, against provision of bank guarantee, in terms of the prevalent Central and State schemes
NITIN KHANDELWAL Chairman, All India Gems & Jewellery Trade Federation (GJF)
This is a landmark day for the jewellery sector as the government rightly kept the overall tax burden low in the industry, keeping in mind the unique characteristics of the gems and jewellery sector, the kaarigars and small jewellers.
SAURABH GADGIL Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association
SOMASUNDARAM PR Managing director – India, World Gold Council
The government’s decision to apply 3% GST on gold is an encouraging step in the current context to stabilise the industry and address the concerns of the millions employed in the industry. This may be an opportune time for the government to cut the import duty and bring down the total tax on gold significantly lower so unauthorised imports are totally eliminated and industry embraces transparency in letter and spirit under GST.
The declaration of GST for the gems and jewellery sector at 3% for gold articles and polished diamond and 0.25% on rough diamond is a very positive move by the government. It will give a thumping boost to the organised players and organised trade, it is also a boon for the consumer. Furthermore, the government will also benefit as more and more players will turn towards organised trade by complying to GST. Currently we feel it is a win-win for everyone.
TANYA RASTOGI Director, Lala Jugal Kishore Jewellers
Well , 3% will not cause any disruptions and we are glad that it did not fall in the 5% slab. This bill is welcomed by the industry and will not impact consumer sentiment in any way though there is a possibility that the cost to the jeweller may increase. I am yet to study the bill in detail and its implementation. However, gems and jewellery industry being one of the growth sectors, this is a good slab.
ADITYA PETHE Director, WHP Jewellers
Currently, the industry pays taxes around 2 to 2.5%,
SAMIR SAGAR Director, Manubhai Jewellers
It is really good to see that the government has been considerate towards the gems & jewellery industry and put it under the 3% slab. This will have a positive impact on the sector and encourage it to be more streamlined. Consumers and jewellers will take the first few months to adapt to the new rule but once that phase ends, the market will stabilise. We think this new bill will bring about stability in processes and create a level playing field for businesses in the industry. so 3% is almost as good as no impact by the taxes. The gems and jewellery sector is an unorganised space and a lot of players are in the rural regions too. With this taxation, many unorganised players will be encouraged to enter the organised trade. We are yet to study how the input tax credit would work and will plan our strategy accordingly. Overall, the bill does not seem to have an inflammatory impact as most of the rates are revolving around the current tax brackets.
ISHU DATWANI Founder, Anmol Jewellers
I’m happy at the understanding and maturity that the government has shown towards the jewellery segment. Now we jewellers have to reciprocate by embracing GST and the special treatment given to us. I do want to thank GJF for working tirelessly for the industry and making this possible.
MARK GERSHBURG CEO, GSI
The new GST tax rates would spur growth and help organise the jewellery industry. Additionally, the rates would promote transparency in the industry. One of the concerns over GST is it may make India’s diamond exports less competitive on the global market in terms of price because some Asian countries including Thailand, China, Sri Lanka and Vietnam do not levy GST on imported rough diamonds.