India’s Gem & Jewellery Export Promotion Council (GJEPC), the country's umbrella organization for the promotion of the trades, wants tax officials to be made more fully aware of how the industry works after they confiscated polished diamonds from couriers who were returning them to their owners in Mumbai.
The GJEPC's chief executive director, Sabyasachi Ray, wants clearer tax rules following the raid by the preventive wing of the Goods and Services Tax (GST) department's excise division, Rapaport reported. Officials from GST were not fully informed of how the trade works, he claims.
The diamonds should not be subject to tax since they were mostly polished goods which had been sent to Surat – India's main diamond processing center. The couriers were stopped taking the diamonds back to the companies who own them in Mumbai, Ray said.
The mistake was apparently quickly understood by the authorities who returned most of the diamonds by Monday, with the remaining diamonds to be released thereafter.
The Indian government should adapt GST rules for diamonds, similar to regulation in Belgium which does not levy a tax on transactions between registered diamond traders, the GJEPC said.
In India, there is tax on imported diamonds, but not on exports. Diamond traders pay an import tax on rough diamonds and must then apply for a refund when they export the polished diamonds. Ray said this process is pointless since 95% of the diamonds in India are exported after cutting and polishing.
