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India Trade Body Attacks Tax on Rough
Jun 4, 2017 6:47 AM
By Rapaport News
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RAPAPORT... India’s Gem & Jewellery Export Promotion Council (GJEPC)
has criticized the government’s decision to tax rough diamonds, claiming it
will damage the nation’s manufacturing sector.
The government will introduce a 0.25% levy on the category as
part of its new tax regime, known as the Goods and Services Tax (GST). The GST
will replace the existing system, under which rough diamonds are exempt from
taxes.
Finance minister Arun Jaitley (pictured) announced the new rates on
Saturday, following months of uncertainty. Under the new program, the
government will tax gold and gold jewelry at 3% — a lower rate than some
members of the GST decision-making council had been arguing for. Gold is currently
subject to a 1% excise duty, and individual states impose an additional
value-added tax (VAT) of 1% or more.
Praveenshankar Pandya, chairman of the GJEPC, praised the
decision to limit the rate on gold and jewelry, but described the tax on rough
diamonds as a “retrograde step.”
“For a segment wherein 95% of the output is exported, and
whose global footprint is under constant stress from other competitive
economies, an upfront levy of GST on rough imports, which was hitherto
exempted, would invariably cause a major setback to the trade and impact
India’s significance in the global markets,” Pandya said Saturday.
With profit margins already thin, companies will be forced
to reevaluate whether cutting and polishing is a viable business operation, he
added, warning that the local industry might lose a “significant volume” of
jobs and capital to other jurisdictions as a result.
“We request the government to reconsider its decision of
taxing rough diamond imports under GST, owing to such severe repercussions,” he
said.
The GST council reached a consensus on the gold tax
following discussions in which members called for rates ranging from 2% to 5%,
Jaitley said. He described the tax on rough diamonds as “nominal” and said it
was for the purpose of keeping an audit trail.
Image: DD News/YouTube
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Tags:
Arun Jaitley, Excise duty, finance minister, Gem & Jewellery Export Promotion Council, GJEPC, gold, goods and services tax, GST, India, Jewelry, Manufacturing, Rapaport News, Rough Diamonds, rough imports, tax, value-added tax, VAT
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