IN­DUS­TRY RE­AC­TIONS

Solitaire - - COVER STORY -

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.

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