Lower GST on diamond job work, sector cheers over Rs 200-cr export refund
The government’s move to slash goods and services tax (GST) on job work services in diamond trade to 1.5% from 5% will help arrest job losses in Gujarat, the country’s diamond cutting and polishing hub, and get exporters a refund of Rs 200 crore which was blocked on this account, said industry executives.
Simultaneously, silver exporters from Delhi, Jaipur and Mumbai will not have to pay 3% GST upfront for importing the metal, as per finance minister Nirmala Sitharaman’s announcement on Friday. This is expected to boost silver jewellery exports, which grew 102.6% yearon-year in the first four months of this financial year.
“Due to the high GST of 5% on job work many units had to close down in places like Amreli, Saurashta, Bhavnagar and others, resulting in job losses. Moreover, capital got blocked on account of this,” said Dinesh Navadiya, regional chairman of Gem & Jewellery Export Promotion Council (GJEPC).
Of the nearly two million people employed by Gujarat’s diamond trade, 700,000-800,000 are engaged in cutting and polishing of diamonds. The reduction in GST comes at a time when profitability margins of diamond manufacturing companies are under pressure. “This move will bring relief on this count,” said Sabyasachi Ray, executive director, GJEPC. India’s gem and jewellery exports fell 5.78% year-onyear in April-July to Rs 67,376.61 crore.
The government has granted exemption from GST and integrated GST at the time of import on silver and platinum by specified nominated agencies, and on supply of silver and platinum by specified nominated agencies to exporters for exports of jewellery. Diamond India (DIL) has been included in the list of nominated agencies eligible for IGST exemption on imports of gold, silver and platinum so as to supply at zero GST to jewellery exporters.
The rate of GST on cut and polished semi-precious stones has been slashed to 0.25% from 3%. This will reduce the burden of working capital blockage and enable exporters to compete in international markets.
