A higher-than-recommended GST rate notwithstanding, the gold jewellery industry has heaved a sigh of relief after the government on Saturday announced taxes under the new regime. GST for the gold jewellery has been fixed at 3 per cent, although the industry has demanded a cap at 1.5 per cent.
Nitin Khandelwal, Chairman, All India Gem and Jewellery Trade Federation said the low GST rate would help the jewellery trade become more tax compliant and help the sector become organised.
Somasundaram PR, Managing Director, India, World Gold Council said that together with customs duty of 10 per cent, the total tax on gold is still high and will continue to have an impact on the jewellery industry. It was an opportune time for the government to cut import duty and bring down the total tax on gold so that unauthorised imports are eliminated, he said.
However, the GST of 0.25 per cent on rough diamonds has caught the industry unawares and may be a blow to the cut-and-polish business.
Praveenshankar Pandya, Chairman, Gem & Jewellery Export Promotion Council said taxing diamonds at 0.25 per cent and then initiating process for refunds is a retrograde step and not in sync with equivalence policy.
Companies have to re-evaluate the cutting and polishing activity in India, in the light of GST strain and this may lead to significant shift of business and employment to other jurisdictions, he added.