As the Budget 2025 approaches, the gems and jewelry sector is gearing up for significant changes that could reshape the industry landscape. With the rising gold prices affecting both producers and consumers alike, the All India Gems and Jewelry Domestic Council (GJC) is urging the government to reduce Goods and Services Tax (GST) to make the market more favorable. By advocating for a tax cut, GJC aims to boost economic viability and ensure sustainability within this critical segment of the economy.
Demand to Reduce GST from 3% to 1%
The GJC, led by chairman Rajesh Rokade, has announced a demand to cut the existing GST rate from 3% to a mere 1% in the upcoming budget. This significant reduction is expected to enhance compliance and affordability for consumers, especially in rural areas. Rokade emphasized that the tax burden has become increasingly challenging for both the industry and end consumers due to the continuous rise in gold prices.
Benefits of Lowering GST
By lowering the GST, the government can facilitate the following:
| Benefit | Description |
|---|---|
| Improved Affordability | Making jewelry purchases more accessible for consumers, especially those from lower-income backgrounds. |
| Boost to Revenue Collection | Encouraging more purchases leads to increased formal economic activity and enhanced revenue collection. |
| Support to the Industry | Reducing costs for manufacturers, thereby promoting job retention and growth within the sector. |
Call for Differential GST Rates on Lab-Grown Diamonds
In addition to the GST reduction, GJC has highlighted the necessity of implementing a lower GST for lab-grown diamonds. Currently, both natural and lab-grown diamonds are subjected to the same tax rate, obscuring the sustainable and cost-effective benefits of the latter. This differentiation is crucial for consumer awareness and market development.
Proposal for a Dedicated Ministry
To further support the jewelry industry, the GJC is advocating for the establishment of a dedicated ministry focused specifically on gems and jewelry. This would involve creating state-wise nodal offices and appointing a central minister to oversee the sector’s growth and address its unique challenges.
Improvements Needed for Gold Monetization Scheme
Avinash Gupta, the vice chairman of GJC, emphasized the need for reforms in the Gold Monetization Scheme. By facilitating easier EMIs on jewelry purchases, the government could encourage consumers to invest in gold. Additionally, optimizing this scheme could help recycle idle gold in households, contributing to a self-reliant economy with reduced imports.
Potential Outcomes of Reform
The GJC believes that these reforms would lead to:
| Outcome | Expected Impact |
|---|---|
| Increased Participation | A rise in the number of consumers and artisans actively engaging in the gold market. |
| Enhanced Economic Growth | Stimulating job creation and fostering innovation within the jewelry sector. |
In summary, as the Budget 2025 looms, the call for tax reductions, improved policies for lab-grown diamonds, and the establishment of a dedicated ministry highlights the gems and jewelry industry’s pressing needs for survival and growth in a rapidly evolving market. These changes could pave the way for a robust and sustainable environment, ultimately benefiting both consumers and the economy as a whole.