India’s diamond and coloured gemstone industries will have some ₹5,000 crore ($770 million) of their working capital locked up as they pay goods and services tax (GST) at every stage of the process chain, Gem & Jewellery Export Promotion Council Chairman Praveenshankar Pandya told the media.
The GST levied during the movement of a diamond or a coloured gemstone through the process pipeline will finally be refunded, Pandya noted, but said that the refund would come only after the finished stone was exported and a tremendous amount of working capital would be locked up at a time when Indian banks, many saddled with large non-performing assets (NPAs) are reluctant to increase their exposure to the industry.
Pandya observed that in other gemstone and diamond processing countries like Belgium, Israel and Hong Kong, the intra-industry movement of unfinished stones was not taxed.
Noting that just some 6 percent of the Indian industry’s diamond output went into the domestic market, Pandya said that the entire export-oriented process chain that imported $16 billion in rough and exported $23 billion in polished, creating 1.2 million jobs in the process, should not be taxed for this small percentage. He called for GST to be levied on the 6 percent of diamonds at the time of their sale to domestic retailers.
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