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GST Council Retains 3% Rate on Gold, Silver; Diamond Sector Gets Major Relief
GST Reforms: A major question amid the GST reforms is whether these changes will impact gold and silver prices. The GST on gold and silver remains at 3% and will not impact the prices of these precious metals. However, the Gem and Jewellery Export Promotion Council (GEEC) says that the GST reforms have provided significant relief to the diamond and jewellery sector.
The 56th GST Council meeting introduced significant changes to the tax system. All products, except hazardous materials, are now taxed at 5% or 18%. Several essential items will also see their tax reduced to zero. These changes took effect on September 22nd, the first day of Navratri. The key question is whether these revisions will influence gold and silver prices.
It’s important to note that GST on gold and silver remains at 3%. Experts believe the new two-slab GST structure will not affect these precious metals, as they are categorized separately and already attract a special 3% rate.
Additionally, the Gem and Jewellery Export Promotion Council (GJEPC) stated that the GST reforms provide significant relief to the diamond and jewelry industry. They mentioned that the government has decided to exempt natural cut and polished diamonds up to 25 cents from IGST under the Diamond Import Authorization Scheme (DIAS), which previously faced an 18% IGST. This exemption will alleviate working capital pressures and benefit small diamond processors and exporters.
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Furthermore, lowering GST on jewelry boxes from 12% to 5% will reduce costs for retailers and exporters, making packaging and gifting more affordable for consumers. This benefits both businesses and buyers.
GJEPC Chairman Kirit Bhansali expressed that these measures will boost domestic demand and support the export supply chain, which faces challenges globally. He emphasized that the sector is committed to passing on benefits, like lower costs for jewelry boxes, transparently to Indian consumers. This will enhance trust and contribute to long-term industry growth.
These reforms, along with GST reductions in related sectors such as handicrafts, leather goods, and packaging, will further strengthen India's diamond and jewelry ecosystem. By reducing operational costs, increasing affordability, and boosting global competitiveness, these measures reinforce India's position as a leading hub for diamond processing, jewelry design, and exports.
