Jewellery exporters seek refund of ₹600-cr accumulated input tax credit

Our Bureau | | Updated on: Jun 30, 2022
Colin Shah, Chairman, GJEPC

Colin Shah, Chairman, GJEPC | Photo Credit: PAUL NORONHA

The increase in cut and polished diamond GST rate to 1.5% will curtail accumulation of input credit, says GJEPC

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.

Published on June 30, 2022
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you