The Union Minister for Finance, Defence and Corporate Affairs, Shri Arun Jaitley announced GST rates for gem-n-jewellery goods after the 15th Meeting of the GST Council held at Vigyan Bhavan in the national capital. He said: “There was extensive debate on gold, and between 2% and 5%, there was almost a vertical division. A consensus has been reached at 3%”.
The fixed at un-announced new slab of 3% is a proper balance between the ongoing tax of 2% & the lowest GST slab of 5%. Gold, gems-n-jewellery & processed diamond taxed 3% while rough diamond fixed levy at 0.25%. To resolve tax slab of rest pending goods the 16th meeting of GST Council is to be held on June 11.
Immediately, virtually whole of the gem-n-jewellery industry & trade, reacted just after the announcement! Not only GJEPC & GJF but also related jewellers & WGC also casted their views on the announced GST slab for gem-n-jewellery goods! Mr Somasundaram PR, Managing Director, India, World Gold Council said: “The GST is the single biggest indirect tax reform in India. It is intended to bring transparency, increase tax compliance and improve transaction traceability.
The Indian government’s decision to apply 3% GST on gold is an encouraging step in the current context to stabilise the industry and address the concerns of the millions employed in the industry. Together with customs duty of 10%, the total tax on gold is still high and will continue to have an impact on the jewellery industry.
This may be an opportune time for the government to cut the import duty and bring down the total tax on gold significantly lower so unauthorised imports are totally eliminated and industry embraces transparency in letter and spirit under GST. However, transition to GST will be disruptive in the short-term, as the large unorganised segment and consumers adjusts to the new tax system, but in the longer-term it will streamline gold trade and boost value addition.”
De facto, the short-term disruption can be understood at any new starts! Even in the past at the introduction of VAT like occasions it was managed by trade-n-industry! Mr Saurabh Gadgil, CMD-PNG Jewellers said, “The declaration of GST for the Gems and jewellery sector at 3% for gold articles & polished diamond and 0.25 percent on rough diamond is very positive move by the government.
It will give a thumping boost to the organised players and organised trade, it is also a boon for the consumer, furthermore the government will also benefit as more and more players will turn towards organised trade by complying with GST. Currently we feel it is a win-win for everyone.”
Ms Tanya Rastogi, Director, Lala Jugal Kishore Jewellers said, “ Well 3% will not cause any disruptions and we are glad that it did not fall in 5% slab. This is welcomed by the industry and will not impact consumer’s sentiment in any way though there is a possibility that the cost to the jeweller may increase. However, being a growing industry gem-n-jewellery is at good slab in the whole set of GST.”
Mr Aditya Pethe, Director-WHP Jewellers said: “Currently, the industry pays taxes around 2 to 2.5% & accordingly 3% is almost as good. There is no notable impact by the announced tax. Gems and Jewellery sector is unorganized space and number of players are in the rural regions too.
With this taxation, many unorganized players will be encouraged to enter the organized trade. We are yet to study how the input tax credit would work and will plan our strategy accordingly. Overall, the GST slab does not seem to have an inflammatory impact as most of the rates are revolving around the current tax brackets.”
By casting reaction on GST rate Mr Samir Sagar, Director-Manubhai Jewellers said: “It is really good to see that the government has been considerate towards the Gems & Jewellery industry and put in under the 3% slab. 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 stabilize. We think GST will bring about stability in processes and create a level playing field for businesses in the industry."
Mr Ishu Datwani, Founder, Anmol said, “I'm happy at the understanding & maturity that the Government has shown towards the jewellery segment. Now we jewellers have to reciprocate with embracing GST & the special treatment given to us. I do want to thank GJF for working tirelessly for the industry and making this possible.”