Barred from diamond bids, jewellery exporters seek equalisation levy relief

Jewellery exporters have sought equalisation levy exemption from the finance ministry as new variations to the Revenue-Tax Act have impacted the procurement of tough diamonds by means of on the internet auctions.

The procurement of tough diamonds from worldwide miners and traders by means of the e-auction method appeals to additional 2 per cent equalisation levy. This has led to worldwide miners amending the deal conditions. Some auction homes have barred Indian buyers from collaborating in their June place auction method, said Colin Shah, chairman, Gem & Jewellery Export Advertising Council.

The ask for options in the industry body’s illustration to the finance ministry for Union Finances 2021-22.

In Finances 2020-21, the authorities had released 2 per cent equalisation levy on the sale of merchandise and providers by foreign e-commerce operators. The provisions – aimed at bringing foreign e-commerce operators generating sales in India underneath the tax ambit – have impacted the procurement of tough diamonds by means of digital platforms.

The procurement of diamonds on the internet was a preferred selection during the Covid-19 instances. Now that is been impacted thanks to the equalisation levy. World miners do not want to get into taxation issues in India, added Shah.

In August, Finance Minister Nirmala Sitharaman had confident the industry that e-trade of tough diamonds would not catch the attention of the levy, but the authorities is yet to problem a clarification.

The industry has also questioned the authorities to reduce the import responsibility on important metals because a greater responsibility on gold has resulted in the commodity being imported from international locations, this kind of as South Korea and Malaysia, India has signed a free of charge trade agreement with.

This has led to an maximize in selling price arbitrage in the domestic markets. A higher import responsibility of 12.5 per cent ought to be introduced down to 4 per cent, rendering unofficial channels importing important metals, this kind of as gold, unattractive, said Shah.

The industry body estimates that decreasing the import responsibility to 4 per cent will assist in releasing up doing the job funds to the tune of ~600 crore on the import of gold bars for export applications. India at this time imports ~seven,830-crore truly worth gold bars for exports.

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