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GJEPC Delegation Meets Finance Minister

Jan 15, 2016

A delegation comprising Praveenshankar Pandya, Chairman, GJEPC and other industry representatives today met with Shri Arun Jaitley, Hon’ble Minister of Finance, Government of India to discuss some of the critical issues facing the gems and jewellery industry in India and suggest appropriate steps to solve them.

Many of the issues raised during the discussions were related to the taxation policy of the government, with the chairman suggesting reforms that would enhance the ease of doing business for the industry. He also called on the Finance Minister to take measures that create certainity rearding tax provvisions and reduce the quantum of tax-related litigation.

The delegation requested for the introduction of Special Turnover Tax regime for the diamond industry with 0.75% tax on sales turnover (computing net income as 2.5% of the turnover, available till 6% of income). This would be along the lines of the tax regimes prevalent in other diamond trading nations like Belgium and Israel. Such an approach would be tax neutral and encourage companies in Belgium and Dubai, especially those run by NRIs to shift capital to India, in addition to boosting exports.

 

The chairman also urged the government to permit the sale of rough diamonds at the SNZ in Mumbai by implementing a 0.25% tax on sales turnover achieved at SNZ by foreign mining companies. This, he pointed out, would generate a new area of tax collection by shifting such sales from Belgium, Israel and Dubai.

 

The finance minsiter was also appraised of harassment faced by the industry in the form of different litigations related to

  • Penalty for Record Keeping for Transfer Pricing
  • Imposition of both Import duty and Service Tax on same goods
  • Non-refund of service tax paid on way of exports

The chairman pointed out that uncertainty regarding tax laws in the country led to increased litigation and ultimately reduced ease of doing business here. As a result, FDI flows to other competing countries, he said.

The chairman also urged the government to include the gems and jewellery segment under the Interest Subvention Scheme and Merchandise Exports from India Scheme (MEIS). He said that the gold jewellery sector had huge potential, and suggested that jewellers should be involved under the government’s Gold Monetisation Scheme. He also said that the current 2% difference between import duty on gold dore bars and gold bars was too high and suggested it should be brought down to 0.25%.

The Hon’ble Minister heard the views of the industry and assured them that the government will look into the same.

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