All India Gems and Jewellery Trade Federation (GJF), national nodal trade body for the promotion and growth of trade in gems and jewellery across India, has raised concerns for GST rate of 4 per cent & has proposed GST rate of 1.25 per cent for the gems & jewellery sector. GJF sought minimal GST rates even as the GST Council commenced a crucial 3-day meeting to set rates.    

As the introduction of Goods and Services Tax (GST) will be a landmark indirect tax reform, (and will replace the present indirect tax structure), GJF has proposed that the GST Council should consider the recommendations of the Sub-committee of High Level Committee (HLC) constituted by the Government (and headed by Dr. Ashok Lahiri) to deliberate on levying excise duty on the unorganised gems & jewellery sector.  The representations made by the G&J sector to the High Level Committee were unanimously accepted and accordingly notifications and circulars were issued.

Mr. Sreedhar G. V. Chairman, GJF, said, “Gold is a very sensitive product and cannot be taxed at higher levels. While the G&J Industry is now gearing up for the forthcoming GST era, the proposed rate of 4 per cent will hamper the growth of the industry and turn into unorganized sector. This will result in drop in tax compliances & revenue and will also encourage smuggling. There is an entire precedent on VAT collections in the past and 1 per cent was the highest revenue collector from G&J industry. Therefore GJF has proposed that the GST rate for the gems & jewellery sector should be kept at 1.25 per cent, if the Govt. expects the industry to be compliant and get organized. GJF shall be sending the representation to FM on GST in this week, highlighting various concerns of the sector. It is also important to mention the business characteristics of the gems & jewellery sector that were studied and considered by the HLC and even acknowledged by various departments including Hon’ble Union Finance Minister and accordingly appropriate rules were incorporated in the Central Excise provisions considering the multi-facetted complex business practices prevalent in the sector.”

Mr. Ashok Minawala, Member-High Level Committee (HLC) on excise duty, Director – GJF, said, “It is important to mention that the Hon’ble Prime Minister of India Shri Narendra Modiji, during his address to the industry at Vigyan Bhavan on 23rd July, 2016 acknowledged that the Government became aware about the characteristics of the sector for the first time only through the findings of the HLC report. The High Level Committee Report, which was unanimously accepted by the Government, was prepared after taking the suggestions and recommendations from more than 60 associations of India into consideration. Keeping in mind, the unique characteristics of the gems & jewellery sector, the karigars and small jewellers were kept out of purview of the Excise Duty. Therefore, while we welcome GST we request the GST Council to kindly recognize the practical issues faced by the sector as highlighted in the HLC Report before making any decisions.”