Even as the Union Budget brought reforms on the customs duty front for the diamonds industry, the small players are disappointed over not inclusion of their demand of introducing turnover tax among others.
While expressing satisfaction over rationalization of customs duty for semi-processed, half cut or broken diamonds and cut and polished and coloured gemstones, Surat-based diamond players believed it was a missed opportunity for the Finance Minister Arun Jaitley to introduce turnover tax to ease of tax payment for the diamond players.
“The Income-Tax officials do not understand the nitty-gritty of diamond business. It is therefore necessary to introduce turnover tax to make it easier for both sides. It could have been done this time. But that was not included in the budget. It is not much pleasing budget,” said Dinesh Navadia, president, Surat Diamond Association (SDA).
The Gems and Jewellery Export Promotion Council (GJEPC), an apex body for gem and jewellery representing 5,300 members, termed the budget to be neutral. The diamond and jewellery industry employs around 3.5 million people across the country.
“It was a budget with lots of expectations from the new government. There are a couple of reforms for the sector and we welcome that,” Vipul Shah, chairman, GJEPC told Business Line.
“The budget is almost industry neutral without any of the sector’s demands like introduction of benign tax at practical rates, decrease of import duty on gold bullion and introduction of procedurals for creation of SEZ for rough diamonds finding any mention in the budget,” a GJEPC statement reads.
“However, we believe that this budget shows the intent of the Govt is positive which will improve the fiscal position of the country,” GJEPC said in a statement.
GJEPC expressed happiness over rationalization of import duty of broken diamonds and withdrawal of import duty on pre forms of semiprecious and precious stones have been accepted. Also the rationalization of import duty on processed diamonds to 2.5 per cent will help the domestic manufacturing sector.
“However the Jewelry sector is largely disappointed as the import duty on gold has not been reduced even by 2-3 per cent; which will continue the occurrence of gold smuggling,” it said.