The All India Gem & Jewellery Domestic Council has called on the government to reduce the Goods and Services Tax on bullion and precious ornaments from 3% to 1.25%, arguing that the current rate places an undue burden on consumers and stifles growth in the sector.
In a statement released on February 6, the council noted that when GST was first implemented in July 2017, the price of 24-carat gold was around ₹28,439 per 10 grams—a level at which a 3% tax appeared reasonable. However, gold prices have since soared to ₹86,510 per 10 grams, marking a 204% increase over the past 7.5 years, a change that has not been reflected in the tax rate.
Industry leaders point to a previous indirect tax system that effectively charged only 1% on most transactions, excluding larger jewellers subject to excise duty. “Based on the revenue equivalence ratio and considering the dramatic rise in gold prices, it’s clear that the effective GST should be about 1.25%,” explained Mr. Rajesh Rokde, Chairman of the council. He emphasized that this adjustment would not only alleviate consumer costs but also discourage unregulated trade by keeping the tax structure competitive and fair.
Mr. Avinash Gupta, Vice Chairman of the council, echoed this sentiment, arguing that the lower rate would honor the principle of revenue neutrality—a cornerstone of the GST framework. He recalled that prior to GST, Central Excise Duty was imposed at just 1%, complemented by a similar rate from state VAT, benefiting the vast majority of the industry. “For an industry that significantly contributes to India’s economy, employment, and exports, maintaining an overly high tax rate is counterproductive,” Gupta stated.
This appeal comes amid a broader call by the government for rationalizing and simplifying GST rates, an effort supported by Finance Minister Smt Nirmala Sitharaman. Supporters of the proposed reduction see it as a strategic move to bolster domestic manufacturing under the ‘Make in India’ initiative, aligning taxation policies with the realities of today’s market. Lowering the GST rate on gold could encourage more robust local production, create jobs, and help solidify India’s status as a global leader in jewellery craftsmanship.
As the debate over GST adjustments continues, industry stakeholders remain hopeful that a more balanced approach will soon be adopted, one that safeguards both revenue targets and the sustainable growth of the gem and jewellery sector. The council’s proposal, they argue, is not merely a request for tax relief—it is an effort to foster an environment where businesses can thrive without compromising on fairness or economic stability.
