Jewellery industry seeks reduction in GST rate in upcoming Budget

The All India Gem & Jewellery Domestic Council (GJC) wants a reduction in the GST rate on jewellery from 3% to 1.25% in the upcoming Budget. The apex body of the gems and jewellery industry has urged the Finance Ministry to raise the PAN card limit from Rs 2 lakh to 5 lakh. It said many households in rural India do not hold pan cards and experience difficulty in arranging minimum required jewellery.

India’s jewellery industry is in recovery mode but fears the omicron variant driving the third wave as talks of restrictions and additional curbs are on. The council highlighted that India’s gem and jewellery businesses and allied businesses continue to suffer, and face the brunt of the pandemic for nearly two years now.

“Business has been slack due to lockdowns and curbs on retail sector, customers are not spending much on jewellery, and the MSME jewellers, craftsmen and artisans, who comprise the bulk of the indigenous industry,” it said.  They are not able to claim any respite or relaxation in spite of their growing woes and stress. As such, the GJC has urged the government for suitable clarification on the minimum quantity of gold, which an individual can deposit under the Gold Monetization Scheme (GMS) without being questioned by any departmental authorities. It also requested the EMI facility for the purchase of 22K gold jewellery be allowed to the gems and jewellery industry. The industry in turn will lead to substantial growth of the business of the industry post-pandemic.

Ashish Pethe, Chairman of the GJC, said the industry has suffered a lot during these harsh times. “It is also identified as one of the stressed sectors in KV Kamath’s report. Hence, GJC has proposed changes in Section 40A of the Income Tax Act so that the existing daily cash limit of Rs 10,000 per day be increased to Rs 1 lakh per day,” he said. “GJC has urged the government to waive off the bank commission (1-1.5%) on purchase of jewellery through credit cards.”

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In the case of jewellery sold is being reinvested in new jewellery, the council wants the exemption from Capital Gain as per Section 54F of the Income Tax Act 1961 to be extended to gems & jewellery industry. It believes this will help the industry move towards organized and compliant business practices. The GJC has also sought a cumulative GST rate of 1.25% based on Revenue Equivalence Principle on gold, precious metals, gems and articles of jewellery made of such goods.