Gold & Jewellery industry upbeat on GST; GJEPC calls GST on Diamonds a retrograde step
GJEPC raising its concern over GST on Diamonds mentioned in a release that the move would cause a set-back to the export oriented diamond industry.
The must awaited GST rates for the gems and jewellery industry were announced today during the 15th GST Council Meeting in Delhi.
For gold, the GST rate has been fixed at 3 per cent introducing a new tax slab, which is in line with industry expectations that had proposed to keep GST between 2-5 per cent.
Commenting on how the GST rates would take the gold and jewellery industry towards a brighter future, Nitin Khandelwal, Chairman, GJF said “This is a landmark day for the jewellery sector as the Government rightly kept the overall tax burden low in the industry keeping in mind, the unique characteristics of the gems and jewellery sector, the kaarigars and small jewellers.”
“We wholeheartedly thank the Honourable FM Arun Jaitley, State FMs, GST Council, VAT Commissioners, entire CBEC for their tremendous support and guidance. This low GST rate would help the Gold and Jewellery trade to go for more compliant and would mature as an organised sector in the years to come. In fact, this move will encourage the industry to become more organized, and help GJF to take them towards the path of accountability and transparency. We urge jewellers community to exercise utmost preparedness and start migrating to the GST regime, with the help of Software that will be launched soon by GJF, that will help the jewellers migrate and comply”.
GST rate for Rough diamonds is set at 0.25 per cent while other than Rough Diamonds, i.e cut and polished and semi- polished diamonds would be taxed at 3 per cent.
Though GJEPC Chairman, Praveenshankar Pandya called the GST rates for Diamonds as retrograde stop, he welcome the government’s step to keep GST rate of 3 per cent on gold and jewellery. Expressing his dissatisfaction over GST rates for Diamonds, he said “Taxing diamonds is a retrograde step and not in sync with equivalence policy. Diamonds are the key raw materials for gem and jewellery exports business. Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive. In sync with the Hon. Prime Minister’s directives, gems & jewellery exporters have to focus on the big picture of making India a global diamond hub and popularize Indian jewellery across the world rather than get entangled in procedures for refund. It is difficult for gems & jewellery exporters to pay 0.25 per cent and then initiate process for refunds, etc.”
Commenting on the tax rate for gemstones, Rajiv Jain, Sambhav Gems said “Duty on Cut and Polished Gemstones won't impact much, as it will eventually set in jewellery and will receive input credit for the same. Industry needs to look at a bigger picture and get organised.”
Gold and jewellery industry which is considered as the largely unorganised sector in India seem to have made up its mind to wholeheartedly welcome the government stop. A number of retailers that we spoke to seem to be happy with the government decision. “Currently, the industry pays taxes around 2 to 2.5 per cent so 3 per cent is almost as good as no impact by the taxes. Gems and Jewellery sector is unorganized space and a lot of players are in the rural regions too. With this taxation, many unorganized players will be encouraged to enter the organized trade. We are yet to study how the input tax credit would work and will plan our strategy accordingly overall, the bill does not seem to have an inflammatory impact as most of the rates are revolving around the current tax brackets”, said Aditya Pethe, Director, WHP Jewellers.
Even Tanya Rastogi of Lala Jugal Kishore Jewellers said that 3 per cent GST rate on gold and jewellery will not cause any disruptions. She further said “We are glad that it did not fall in 5% slab. This bill is welcomed by the industry and will not impact consumer’s sentiment in any way though there is a possibility that the cost to the jeweller may increase.”
Now the jewellery industry too needs to work in tandem with the government’s step. Urging the industry to comply with the step, Ishu Datwani of Anmol Jewellers said ““I'm happy at the understanding & maturity that the Government has shown towards the jewellery segment. Now we jewellers have to reciprocate with embracing GST & the special treatment given to us. I do want to thank GJF for working tirelessly for the industry and making this possible.”
Initially, the jewellers are bound to face few difficulties but as soon as they adapt to the changes, it would help industry to grow further. Talking about the change, Samir Sagar of Manubhai Jewellers said “Consumers and jewellers will take the first few months to adapt to the new rule but once that phase ends, the market will stabilize. We think this new bill will bring about stability in processes and create a level playing field for businesses in the industry."