Diamond Discourse

Bharat Diamond Bourse (BDB) in partnership with RSM Astute Consulting Group organised for an informative meet for the diamantaires and members of BDB on February 15, at the newly inaugurated S G Trading Hall in BDB premise. The subject for discussion was ‘Gem and Jewellery Industry in India and Belgium-Tax and banking Aspects’ and the event comprised three sessions, namely—Gems and jewellery industry in Belgium: Certain tax and banking aspect; Domestic transfer pricing regulations in India: Certain relevant aspect; and New service tax regulation in India.

Addressing the gathering and welcoming the speakers and guests, Founder of RSM Astute Consulting Group, Suresh Surana, said, “India and Belgium are known for their contribution to the diamond industry, so we bring experts from the fields to address the gathering and discuss the basics and finer details of the topics.”

Surana also gave an overview of the tax system in both the countries and the new tax regime in India and its impact on the gem and jewellery sector in India.

The highlight of the event was the session by Loc Toelen, Managing Partner of RSM, Belgium, who provided an update on Gem and Jewellery Industry in Belgium: Tax and Banking Aspects. Toelen is also auditor to many big diamond companies in Belgium. “Belgium provides a very conducive and business friendly environ, with easy taxation system, minimal interference from the government and quick and easy proceedings of the paper work. The country is a small one with a population of 11 million, and it relies much on export of rough and polished diamonds and import of diamond and precious metal. India has been dealing with Belgium based industry and vice-versa since the past 40 years, and Indian community makes an important part of Belgium too.”

Throwing light on the business environ in Belgium, Toelen said right from acquiring some permission for investment to hiring the locals is not a difficult process. He also discussed legal compliances and working in Belgium with permanent establishment.

Talking tax, he said. “Belgian tax rules are simple and taxes in diamond business are calculated over the turnover. And there is a separate security and tax regime for expatriates. The expatriates are taxed only on income earned in Belgium and not on their overall income that they must have earned in some other country. For the tax efficiency is known as an international route for optimal tax planning.”

Toelen also discussed the nuances of taxation on holding structures and capital intensive regime. “The capital intensive regime is most important in diamond industry in Belgium because of stringent bank requirements and rules.”

Next speaker, Rukshar Sidhwa, senior consultant at RSM Astute Consulting Group threw light on the Domestic Transfer pricing Regulation. Talking about the idea behind imposing transfer pricing, Sidhwa said that earlier the transfer pricing was only applicable on international transaction to avoid the fund erosion, however, the domestic transfer pricing was introduced to bring parity between the two parties involved. “The Domestic Transfer Pricing for Specified Domestic Transaction was introduced with effect from the financial year 2012-13. She threw light on aspects like highlights, SEZs, parties, payment and penalty provision in domestic transfer pricing.

The third session was on new service tax regime and its implication on gem and jewellery industry. The presentation was given by K H Vishwanathan, Director of the RSM Astute Consulting Group and Narendra Soni, Consultant in the same organisation.

Explaining the new service tax regime, Vishwanathan said, “The service tax regulation was introduced in 1994 and only three services were made liable to the tax, however, over the period the list of services increased and 119 services became taxable by 2012. Later, a negative list was introduced with 17 items in that.” He also discussed the concept, taxation and application of reverse charges and particle reverse charges.

He concluded his discussion with an explanation on exemption and refunds given to the SEZ units and developers; service tax applicable in the sale of rough and polished diamonds.

The event was attended and appreciated by BDB members and diamontaires who already have their presence in Belgium market or who intend to take their business to the Mecca of diamond business.