Jewellers want small- and medium-size diamond processors exempted under GST

Business Standard By Dilip Kumar Jha April 10, 2017. 02:54 IST

Industry says demand has been made to avoid cascading taxation, maintain competitiveness

To avoid multiple taxation under the coming goods and services tax (GST), diamond jewellers have urged they be exempted from levies on the processing of diamonds.

“Thousands of small and medium size units, with an estimated 100,000 work force, primarily in Gujarat, currently purchase (rough) diamonds from sightholders (authorised agents) of large global miners like De Beers, Rio Tinto and Alrosa, to process these. After processing, they sell these to large processors. Thousands of collection centres, therefore, are involved in the diamond business — after accumulating processed diamonds from small processors, they supply directly to exporters or large jewellery manufacturers. Largely spread in Gujarat, these small units currently execute their business duty-free. In our meeting with representatives of the GST Council, we have urged them to exempt these small units from duty levy,” said Praveen Shankar Pandya, chairman, Gems and Jewellery Export Promotion Council (GJEPC).

Pandya says he met representatives of the GST Council on Friday and explained these details.

From a record $43 billion in 2013-14, gems and jewellery export fell to $31 bn in FY16. GJEPC estimates this to have jumped to $41 bn in FY17 on recovery in global demand, especially in America, consumer of nearly 40 per cent of precious ornaments globally made.

Any levy on the movement of rough or polished diamonds from small units in Gujarat to jewellery manufacturers in Maharashtra or elsewhere would have multiple levies on the same goods. This, the trade contends, would make them uncompetitive in world markets.

“Currently, gems and jewellery manufactured for export attract no levies; that for domestic sales attract around two per cent cumulatively (one per cent of value added tax and one per cent of excise duty). We have requested the government to continue with the same duty level in GST. A final decision is expected soon, perhaps in the next meeting of the GST Council. The officials wanted to know the complexity of the diamond processing business, of which we apprised them,” said Pandya.

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