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Home / Business / Gems and jewellery industry seeks exemption from equalisation levy of 2%

Gems and jewellery industry seeks exemption from equalisation levy of 2%

The levy introduced by the Finance Act 2020 has impacted the procurement of rough diamonds through online auctions
According to the Gem and Jewellery Export Promotion Council, the competitiveness of Indian goods will suffer as other rough diamond importing countries do not have such a levy
According to the Gem and Jewellery Export Promotion Council, the competitiveness of Indian goods will suffer as other rough diamond importing countries do not have such a levy
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A Staff Reporter   |   Calcutta   |   Published 08.12.20, 03:32 AM

The gems and jewellery industry has sought exemption from the equalisation levy of 2 per cent that has impacted the procurement of rough diamonds through online auctions.

The Finance Act 2020, through section 165A, has introduced this levy on the consideration received by an e-commerce operator from the e-commerce supply of goods made or facilitated by it to an Indian resident.

This has led to a confusion with global miners looking to amend contract terms with Indian businesses. A few auction houses/trading companies have even barred India-based customers from participating in the spot auction process earlier in June.

According to the Gem and Jewellery Export Promotion Council, the competitiveness of Indian goods will suffer as other rough diamond importing countries do not have such a levy.

Colin Shah, chairman of GJEPC, on Monday said the levy is more aimed at e-commerce operators but has affected the jewellery industry, which has requested the government for a clarification that the levy is applicable only on business to consumer and not business to business.

“We are hopeful that this will come within the budget,” said Shah.

Procurement of diamond through online auction is a preferred choice for the industry amid the Covid pandemic that restricts travel to physical auctions.

The government in a meeting with the industry in August had been appraised of the issue.

A reduction in import duty on cut and polished diamond from 7.5 per cent to 2.5 per cent, a reduction in import duty on precious metals including gold from 12.5 per cent to 4 per cent, amendment in taxation provision to enable sale of rough diamonds in special notified zone in Mumbai, extension of common facility centre scheme for five years, technology upgradation fund scheme for gems and jewellery industry are among the other issues the industry has included as part of its pre budget proposal.

GJEPC estimates that lowering the import duty to 4 per cent will help in freeing up working capital to the tune of around Rs 600 crore on the import of gold bars for export purposes.

Exports improve

GJEPC said that there has been a significant improvement in the declining exports from India. Gross exports at USD 2.48 billion was down 3.88 per cent in November 2020 compared to November 2019. The year on year decline in October was 19.02 per cent.



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