Comments
The increase in GST rate for cut and polished diamonds to 1.5 per cent from 0.25 per cent will resolve the issue of input tax credit accumulated due to inverted duty under GST regime.
The industry has also urged the government to refund the accumulated ITC of ₹600 crore.
The new tax rate approved by the GST Council at its 47th meeting will come into effect from July 18.
In 2018, the GST rate on cut and polished diamonds was reduced from 3 per cent to 0.25 per cent, whereas the gem and jewellery industry continued to incur GST between 1.5 per cent and 18 per cent on procurement of input services and capital goods. Absence of facility to claim refund of such input tax credit accumulated on account of input services led to huge ITC accumulation.
While the services are rendered in domestic market, the final goods eventually culminate into exports.
GJEPC, the apex body of gem and jewellery trade, has been seeking redressal of the issue by increasing GST rate on cut and polished diamonds in the front end and the tax rate on grading and certification to 1.5 per cent.
Colin Shah, Chairman, GJEPC, said the ITC accumulated by the industry is estimated at over ₹600 crore.
The increase in GST rate will not only stop further accumulation of ITC but also help reduce blocked working capital and stimulate industry growth. The government should formalise a mechanism for the traders to receive the refund of the accumulated GST, he added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.