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India’s Jewelers Applaud Simpler Tax System

Lingering concerns about how GST will be implemented for the diamond and jewelry trade

Aug 14, 2016 4:30 AM   By Rapaport News
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RAPAPORT... India’s jewelry industry welcomed the goods and services tax (GST) passed by parliament last week even as there remain concerns about its implementation.

“We expect the new system will free up the movement of goods and enable us to increase supply and sales,” said G.V. Sreedhar, chairman of the All India Gems & Jewellery Trade Federation (GJF). “It will take a few years to adjust to the new system but this is a positive development.”

GST is expected to be implemented on April 1, 2017, the start of India’s financial year, and will consolidate several payments that are made currently into just one charge. For the jewelry trade, those payments include an excise duty on manufactured goods, value-added tax on sales, and a 0.1 percent octroy applied to polished diamonds shipped across state lines into Mumbai.

Under the new regime, companies will get refunds for taxes paid at different stages of the supply chain, mitigating the application of double-taxation. That, however, throws up some unique challenges for the diamond and jewelry trade, according to Sabyasachi Ray, executive director of the Gem and Jewellery Export Promotion Council (GJEPC). Basing the tax calculation on supply rather than the final sale, as the GST proposes, is easier said than done because diamonds and jewelry products change hands more frequently, he explained.

It’s still unclear how the tax will apply to the diamond and jewelry trade, or what the GST rate will be. Sreedhar stressed compliance would be an issue if the tax rate is more than 2 percent.

The industry leadership has submitted a paper outlining their concerns about the GST and are scheduled to present them to government later this month, Sabyasachi said. “We’re not yet sure how it will affect the jewelry trade and there will likely be exemptions for certain industries,” he added. “Overall it should simplify the process.” 
Tags: diamonds, GJEPC, GJF, India, jewellery, Jewelry, Rapaport News
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