India's GST (Goods and Services Tax) Council met on January 18 slashed the tax rate on 54 services and 29 items, including polished diamonds. Diamond processors and jewellery exporters in the country Around 94 percent of the diamonds processed in the country would attract 0.25 per cent GST effective Friday, according to Business Standard, down from three percent, following the GST Council's decision. This adjustment, however, only applies to trade between Indian states. The remaining six percent of diamonds processed in India and sold directly to consumers would continue to attract three percent GST. The Council's decision comes as a major relief for diamond processors and the entire value chain, and helps overcome ambiguity in the tax structure, as well as avoiding the possibility of mis-declaration and tax evasion.
Chairman of The Gem and Jewellery Export Promotion Council (GJEPC) Pramod Agarwal has welcomed the announcement made by the GST Council yesterday about a reduction in the GST rate on Cut & Polished Diamonds and Precious Stones from 3% to 0.25%, saying it will benefit SMEs and give a boost to the sector. Agarwal pointed out that the bulk of the raw material used in the industry is imported and more than 90% of cut and polished diamonds are exported. He added that since the manufacturing involved high value products, the lower rates will enable the industry to “function smoothly without blockage of working capital”. He opined that changes like these would go a long way in helping the country achieve its aim of becoming the global leader of the gem and jewellery industry.