Mumbai: The jewellery industry has welcomed the GST Council’s decision to keep the overall tax on the industry low saying that the new rate will not have any major inflationary pressure on the prices of gold and would also encourage many unorganised players to enter the organised trade.
The GST council has decided to fix the GST rate at 3 per cent for the jewellery trade. “Currently, the industry pays taxes around 2 to 2.5 per cent, so the 3 per cent GST on gold will not have any major impact. The jewellery industry is scattered and lot of players are in the unorganised sector. With this taxation, many unorganized players will be encouraged to enter the organized trade,” said Aditya Pethe, director, Waman Hari Pethe (WHP) Jewellers.
“This will have a positive impact on the sector and encourage it to be more streamlined. Consumers and jewellers will take the first few months to adapt to the new rule but once that phase ends, the market will stabilise. We think this new bill will bring about stability in processes and create a level playing field for businesses in the industry,” added Samir Sagar, director, Manubhai Jewllers.
However, the GST council’s decision to impose 0.25 per cent tax on import of rough diamonds has upset the jewellery exporters as they feel that it would reduce their competitiveness in the international market since many of them are already operating on thin margins.
Terming it as a retrograde step, Praveenshankar Pandya, chairman of Gem & Jewellery Export Promotion Council said each businesses will have to re-evaluate the viability of conducting the cutting and polishing activity in India, in light of the extent of strain GST would bring on its working capital, and, eventually, this may lead to significant volume of flight of capital and employment to other jurisdictions.
“Diamonds are the key raw materials for gem and jewellery exports business. Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive,” he added.
