Diamond industry requests for Special Turnover Tax regime

Gems and Jewellery Export Promotion Council (GJEPC) has urged the Union Government central government to introduce Special Turnover Tax regime for diamond industry with 0.75 per cent tax on sales turnover like it is in Israel, Belgium and Dubai to encourage companies of non-resident Indians to shift capital to India and give a boost to exports, says reports.

GJEPC has requested the government to permit sale of rough diamonds at the SNZ in Mumbai by implementing a 0.25 per cent tax on sales turnover achieved at SNZ by foreign mining companies. It is expected to generate a new area of tax collection by shifting sales from Belgium, Israel and Dubai to India.

As per recently released import-export figures by GJEPC show that the exports of polished diamonds in December 2015 decreased by 17.1 per cent at $1.20 billion compared to $1.50 billion in the same month previous year. Rough diamond imports during the month increased by 2.44 per cent at 1.46 billion, marginally up by 2.44 per cent in value terms from US$ 1.43 billion the previous December.

The report further states that exports of cut and polished diamonds fell by 14.63 per cent to $ 14.79 billion this year and, imports of rough diamonds fell to $10.12 billion this year, a decline of 23.97 per cent. Gold jewellery (studded and plain) exports were down 22.91 per cent to $6.20 billion in the first nine months of financial year 2016, while that of medallions and coins to $3.70 billion.

Exports of polished diamonds are expected to witness a continuous fall due to weak demand in the USA and China. In the last one year, over 200 jewellery stores in the USA have reportedly shut down. Walmart, too, has announced closure of 269 stores globally.