GJC requests a reduction in GST to 1.25%
MUMBAI, 6th February 2025: All India Gem & Jewellery Domestic Council (GJC), the premier body for jewellers, has urged the government to rationalize the Goods and Services Tax (GST) on bullion and precious ornaments, reducing it to 1.25% from the current 3% to ease the burden on consumers and boost sales.
GJC appreciates Honourable Finance Minister Smt Nirmala Sitharaman ji urging the GST council on rationalising and simplifying GST rates.
When GST was first introduced in July 2017, the price of 24-carat gold was hovering around ₹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 earlier indirect tax structure (Excise + VAT) being effectively 1% and with Excise Duty implementation in 2016, with applicability on only those jewellers having turnover of 10 crores and above, giving ease to almost 80 to 85 % of the industry as they did not fall under the purview of Excise Duty. Hence, under this pretext, GJC believes the effective rate of GST should be 1.25%.
As of February 6, 2025, the price of 24-carat gold stands at ₹86,510 per 10 grams, marking a 204% increase over the past 7.5 years. Despite this significant spike, the GST rate has remained static at 3%, effectively increasing the tax burden on both consumers and jewellers. Consequently, there is an urgent need to reduce the GST rate to 1.25%, aligning taxation with industry realities, encouraging compliance, and achieving revenue neutrality.
A core principle of GST determination was revenue neutrality—ensuring that taxation levels remain equivalent to pre-GST rates. Based on the past indirect tax structure, the revenue-neutral rate for the gems and jewellery industry should be 1.25%, not the current 3%.
India is a global leader in jewellery craftsmanship and manufacturing. To support the ‘Make in India’ initiative, it is essential to establish a competitive taxation framework that fosters local production rather than driving demand toward unofficial or imported channels. Lowering the GST to 1.25% would encourage domestic manufacturers, boost job creation, and position India as a global hub for jewellery making, aligning with the Honourable Prime Minister Narendra Modi’s vision of ‘Make in India’.
Mr. Rajesh Rokde, Chairman of the All India Gem & Jewellery Domestic Council, said, “The Gems & Jewellery Industry (GJI) is a significant contributor to India’s economy, playing a crucial role in employment generation, exports, and overall economic growth. However, the sector has been burdened with high taxation rates, negatively impacting businesses and encouraging unregulated trade. We request the Hon’ble GST Council and concern authorities to reconsider and rationalize the GST rate to 1.25%, ensuring sustainable growth for the industry while maintaining a robust 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, similarly based on Revenue Equivalence Ratio, and also considering the increase in Gold rates, the GST should be 1.25% for the Gems & Jewellery Industry. Hence, the industry urges the government to honour the revenue neutrality principle and revise the GST rate to 1.25%, ensuring fairness and sustainability.”
