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RAPAPORT... India's diamond trade is growing increasingly concerned about two taxes, especially as domestic and international demand for diamonds has weakened recently and margins are very tight. One is defined as a service tax on imports of machinery and software that is used for diamond manufacturing and a second, so-called professional tax is being collected of cutters and polishers by the Surat Municipal Corporation (SMC). Trade groups have been pushing to have both taxes abolished.
Speaking exclusively with Rapaport News, Vipul Shah, the chairman of the Gem & Jewellery Export Promotion Council (GJEPC), said, “We are recommending to the government that, as far as our industry is concerned, there are certain service taxes on machinery and software which need to be abolished since these products are being used to cut and polish diamonds that are then exported. These products eventually helped the country to earn foreign exchange. The request for abolishing these taxes is always on our list during any of the government meetings that we have.”
Meanwhile, the Surat Diamond Association (SDA) has requested the government abolish the professional tax from workers who cut and polished diamonds. Dinesh Navadia, the president of the Surat Diamond Association, said, “Anyone who is into services has to pay a professional tax in Gujarat. The amount of tax depends on the professional's salary, though it is applicable to even someone earning as little as $15."
Navadia explained that early on, the tax was collected directly by the Gujarat government; however, the responsibility became entrusted to the SMC. While SMC employees are being extremely stringent in tax collection, Navadia said reports have surfaced that factories are being told to stop work if the workers don't pay the tax. "This can be termed as harassment in the name of professional tax,” he added.
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