Taxing diamonds is a retrograde step and not in sync with equivalence policy. Diamonds are the 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 Hon. Prime Minister’s directives, gems & jewellery exporters have to focus on the big picture of making India a global diamond hub and popularize Indian jewellery across the world rather than get entangled in procedures for refund. It is difficult for gems & jewellery exporters to pay 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 businesses 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 GST rate of 3% on gold and jewellery and this is in line with our representations and recommendations.
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 buyer) for the purpose of manufacture and export of gold/ platinum/ silver jewellery should be exempted from IGST and GST, against provision of bank guarantee, in terms of the prevalent Central and State schemes