The Gems & Jewellery Export Promotion Council (GJEPC) is asking for a complete exemption of Value Added Tax (VAT) on loose diamonds in the 2003 budget.
The chairman of GJEPC, Sanjay Kothari, said diamonds were processed and traded mainly for exports and were thus an immediate item of jewellery. With 99 per cent of diamonds exported and balance sold as jewellery, existing VAT on jewellery and VAT on loose diamonds amounted to double taxation. Exemption will eliminate this flaw.
India has market share of 60 per cent by value, 85 per cent in volume and 92 per cent in terms of pieces in the global trade in diamonds. Exemption will help exporters make India a top diamond trading centre.
The council has also sought exemption from transfer pricing regulations to eliminate practical difficulties faced by industry owing to peculiar nature of the product. For transfer pricing, customs appraises on export and import of all gems and jewellery from or to India.
The association has asked FERA and IT authorities to issue notifications, like the department of revenue, to stop seizure of stock-in-trade. The revenue department had issued a circular to all commissioners of customs directing that investigations should be done without seizure of stock and within 90 days. In cases where seizure was necessary, goods may be seized but efforts should be made to lift seizure within 7 days.
Abolition of sales tax on diamonds in Maharashtra has also been sought. Other states like West Bengal, Gujarat and Rajasthan have no sales tax on loose diamonds.
