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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)
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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