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India Relaxes Tax on Jewelry-Making

Government lowers manufacturing levy from 18% to 5% following GJEPC petitions.
Jun 13, 2017 10:32 AM   By Rapaport News
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RAPAPORT... India’s government has reduced the tax rate on diamond and jewelry manufacturing to 5% following an earlier announcement that it would charge industry members an 18% levy, the Gem & Jewellery Export Promotion Council (GJEPC) said Monday.

The tax applies to the so-called “making charge” — the amount of money it costs to produce jewelry pieces. It is part of India’s new goods-and-services tax (GST) system, which will go into effect on July 1.

The GST Council made the decision to relax the rate at a meeting on Sunday following petitions by the GJEPC, the trade body said. The council also agreed to an exemption for re-imported polished diamonds that large exporters have sent abroad for laboratory testing.

Under the GST regime, the government will tax rough diamonds and other rough precious and semi-precious stones at 0.25% — a move that received criticism from the GJEPC, which claimed it would damage the nation’s cutting trade. Gold and polished diamonds will be subject to a 3% tax, a decision that got a more positive response from the trade because the rate was lower than the 5% some had feared.

Jewelry sales have increased an estimated 20% to 25% since the June 3 announcement of the tax rates, as consumers are rushing to buy gold for the current wedding season before the GST regime takes effect, a spokesperson for the All India Gems & Jewellery Trade Federation explained.
Tags: finance, Gem & Jewellery Export Promotion Council, GJEPC, goods and services tax, GST, India, Jewelry, Rapaport News, tax
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