In a major relief to the sector, the Union government has accepted the Gem and Jewelry Export Promotion Council’s (GJEPC’s) demand to grant IGST-related exemption on the supply of gold by nominated agencies to exporters of articles of gold.

The GST Council recently announced that gem and jewellery exporters will no longer have to pay the 3 per cent Integrated Goods and Services Tax (IGST) to nominated agencies (banks) from January 1, 2019, said Pramod Kumar Agrawal, Chairman, GJEPC, on Wednesday.

He said the GST Council found it necessary to exempt the intra-State supply of gold as per the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when supplied by the nominated agency under the scheme for “Export Against Supply by Nominated Agency”.

“We are also expecting a similar relief to the exporters of articles of silver and platinum.” He said the upfront payment of IGST and import duty in the form of bank guarantee had led to huge working capital blockage for various small and medium jewellery exporters, increased interest cost, and hassles of compliance to claim refund, consequently impacting their business operations and global competitiveness.

After the rollout of the GST regime and the imposition of 3 per cent IGST on gold, the industry had requested for the IGST exemption on supply of gold to exporters by nominated agencies.

Thereafter, the government of India, in October 2017, exempted specified banks and public sector units (nominated agencies) from the payment of IGST on the import of gold.

This did not benefit jewellery exporters as they still had to bear the upfront payment of IGST/GST and the basic import duty of 10 per cent on procurement of gold for the purpose of manufacture of export of jewellery.

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