To much relief in the gold jewellery and diamond processing industry, the goods and services tax (GST) Council slashed the applicable rate on making charges from the 18 per cent decided earlier to five per cent.
While announcing the decision along with similar reduction on GST rate on various other products and services, Union Finance Minister Arun Jaitley said, “The GST Council has received 133 representations. An officers’ committee made recommendations after studying these representations. Thus, the GST Council has reduced the tax levels in 66 out of 133 cases…The diamond processing and others would attract a levy of five per cent now.”
The Council’s earlier decision of 18 per cent attracted much discontent among jewellery manufacturers, as impractical and likely to cause immense job losses, as 95 per cent of jewellery is made on the basis of job work.
“The sharp cut in the rate on making charges would make tax compliance easy and help reduce the fear of job loss,” said Surendra Mehta, secretary, India Bullion and Jewellers Association, the bullion dealers’ and jewellers’ representative body which raised the compliance issue with the GST Council.
Since the government is considering July 1 rollout of the GST, jewellers would now start preparations for tax compliance through upgradation of technology and other requirements.
Nitin Khandelwal, chairman, All India Gems and Jewellery Trade Federation, sought clarity on the finance minister only mentioning diamond processing in his remarks to journalists and others, without specifying making charges on gold. “We are sure the GST Council meant it for also making charges on gold jewellery. If it is true, we welcome the government’s move,” he said.