Diamond industry seeks exemption from VAT

The diamond industry is seeking exemption from value added tax (VAT).

"Surat is the biggest centre for diamond cutting and polishing in the world. Eight out of ten diamonds produced worldwide are polished here. A majority of these diamonds are exported and hence, when VAT is introduced, the diamond industry should be exempted from it," the Southern Gujarat Chamber of Commerce & Industry (SCGGI) stated in a pre-budget memorandum to the Central government.

Supporting the suggestion, leading diamond merchant Pravin Nanavati, said: "Ninety-nine per cent of the diamonds that are polished in India are exported. These are exempt from taxes. The remaining diamonds are used for local consumption. So even if VAT is levied on the diamond industry, the government would not earn much revenue from it."

"At the same time, implication of VAT would lead to additional paper work and unnecessary burden on diamond merchants. Since there is nothing much to gain, the government should seriously consider our demand, and exempt the diamond industry from VAT," he said.

The chamber suggested that, instead of the diamond industry, the jewellery industry could be covered under VAT.