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India Reduces Industry’s Tax Burden
Sep 23, 2019 5:48 AM
By Rapaport News
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RAPAPORT... The Indian government has lowered the rate of goods and services tax
(GST) for certain diamond work in a move that will help buoy the struggling sector, the nation’s Gem & Jewellery Export Promotion Council (GJEPC) said.
GST on diamond “job work” — manufacturing or other
activities that a company outsources to a third party, such as diamond cutting
or jewelry making — will drop to 1.5% from 5%. Finance Minister Nirmala Sitharaman and the GST council implemented the policy changes at a
meeting in Goa, India, on September 20.
“The measures announced yesterday will enhance [the] ease of
doing business, boost exports, and make India more competitive with respect to
neighboring countries, and attractive as an investment destination,” GJEPC chairman Pramod Agrawal said last
week.
The reduction will lessen the working-capital burden on
Indian diamantaires, who have been struggling with tightening credit from banks
and weak retail demand for polished stones, explained Agrawal. It will also help entice global
companies to set up manufacturing bases in India, he noted.
The GJEPC has been petitioning the government to reduce taxes
on diamonds. In July, the government revised the rules on goods shipped out of
the country for trade shows or consignment, declaring that those items don’t
constitute supply, and are therefore exempt from GST if reimported within six
months.
“The [latest] stimulus will bring cheer to the trade constituents and
industry on the eve of the festival season,” Agrawal added. “It is the right
signal to send to the world, especially on the eve of the prime minister’s
visit to the US, which is the biggest export market for the gem and jewelry
industry.”
Image: Diamond manufacturing. (Shutterstock)
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Tags:
diamond job work, Gem & Jewellery Export Promotion Council, GJEPC, goods and services tax, GST, Nirmala Sitharaman, Pramod Agrawal, Rapaport News
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