The All India Gem & Jewellery Domestic Council (GJC), the leading association for jewellers, has recommended the government to rationalize the Goods and Services Tax (GST) on bullion and precious ornaments, cutting it to 1.25% from the current 3%, in order to reduce consumer burden and increase sales.
GJC appreciates Honourable Finance Minister Smt Nirmala Sitharaman ji’s pushing the GST council to rationalize and simplify GST rates.
When GST was imposed in July 2017, the price of 24-carat gold was approximately ₹28,439 per 10 grams. Based on this price level, the GST Council set the GST incidence rate on bullion and precious ornaments at 3%, despite the previous indirect tax structure (Excise + VAT) being effectively 1%, and with Excise Duty implementation in 2016, with applicability limited to jewellers with a turnover of 10 crores or more, providing relief to nearly 80 to 85% of the industry that did not fall under the scope of Excise Duty. Hence, under this rationale, GJC feels the effective rate of GST should be 1.25%.
As of February 6, 2025, the price of 24-carat gold is ₹86,510 per 10 grams, a 204% increase over the preceding 7.5 years. Despite this large increase, the GST rate has stayed constant at 3%, essentially raising the tax burden on both customers and jewellers. As a result, there is an urgent need to lower the GST rate to 1.25%, matching taxation with industrial reality, increasing compliance, and attaining revenue neutrality.
Revenue neutrality was a key principle in GST determination, which ensured that taxes levels remained similar to pre-GST rates. Based on the previous indirect tax system, the revenue-neutral rate for the gems and jewellery business should be 1.25%, rather than the present 3%.
India is a world leader in jewellery craftsmanship and manufacturing. To promote the ‘Make in India’ effort, a competitive taxation environment must be established that encourages local production rather than driving demand to illegal or imported channels. Lowering the GST to 1.25% would promote domestic manufacturers, increase job creation, and establish India as a global hub for jewellery production, in line with Honourable Prime Minister Narendra Modi‘s objective of ‘Make in India‘.
Mr. Rajesh Rokde, Chairman of the All India Gem & Jewellery Domestic Council, stated, “The Gems & Jewellery Industry (GJI) is a key contributor to India’s economy, playing an important role in job creation, exports, and overall economic progress. However, the sector has been plagued with high tax rates, which have a negative impact on enterprises and encourage unregulated activity. We suggest that the Hon’ble GST Council and relevant authorities reconsider and rationalize the GST rate to 1.25%, guaranteeing long-term growth for the industry while retaining a strong tax base.
Mr. Avinash Gupta, Vice Chairman of the All India Gem & Jewellery Domestic Council, added, “Before GST, Central Excise Duty was levied at only 1%, along with a 1% Value Added Tax (VAT) imposed by most states. Based on the Revenue Equivalence Ratio and the increase in gold rates, the GST should be 1.25% for the Gems & Jewellery Industry. As a result, the sector requests the government to uphold the revenue neutrality concept by revising the GST rate to 1.25%, assuring justice and sustainability.”