India Relaxes Tax on Jewelry-Making

By Rapaport News / June 13, 2017 / / Article Link

RAPAPORT... India's government has reduced the tax rate on diamond andjewelry manufacturing to 5% following an earlier announcement that it would chargeindustry members an 18% levy, the Gem & Jewellery Export Promotion Council(GJEPC) said Monday.The tax applies to the so-called "making charge" - theamount of money it costs to produce jewelry pieces. It is part of India's newgoods-and-services tax (GST) system, which will go into effect on July 1. The GST Council made the decision to relax the rate at ameeting on Sunday following petitions by the GJEPC, the trade body said. Thecouncil also agreed to an exemption for re-imported polished diamonds that largeexporters have sent abroad for laboratory testing. Under the GST regime, the government will tax rough diamondsand other rough precious and semi-precious stones at 0.25% - a move thatreceived criticism from the GJEPC, which claimed it would damage the nation'scutting trade. Gold and polished diamonds will be subject to a 3% tax, adecision that got a more positive response from the trade because the rate waslower than the 5% some had feared. Jewelry sales have increased an estimated 20% to 25% sincethe June 3 announcement of the tax rates, as consumers are rushing to buy goldfor the current wedding season before the GST regime takes effect, aspokesperson for the All India Gems & Jewellery Trade Federation explained.