In what could be a huge relief for jewellery and diamond processing industry before India's biggest tax reform kicks in from July 1, the Goods and Service Tax (GST) Council reduced the applicable rate on making charges from 18 per cent to just 5 per cent.
"The GST Council has received 133 representations. An officers' committee made recommendations after studying these representations. The GST Council has reduced the tax levels in 66 out these 133 cases. The diamond processing and others would attract a levy of five per cent now," Union Finance Minister Arun Jaitley said while addressing a press conference after 16th GST meeting.
Earlier, All India Gem and Jewellery Federation, the India Bullion and Jewellers Association (IBJA), and other trade representatives had pressed for lower taxes on jewellery making charges.
Currently, tax is exempted on jewellery making charges. Early this month, the GST Council meeting had fixed GST on precious metals and diamonds, including jewellery, at 3 per cent. However, tax on making charges of jewellery was kept at 18 per cent.
Tax on making charges would have in turn raised tax for consumers to over 4 per cent, almost double of what was being currently charged in the form of 1 per cent each on VAT and excise on jewellery.
Among the items on which the GST rates have been reduced by the GST Council include cashew nut, sauces, pickles, insulin, children's colouring and drawing books, cutlery.
GST rates were also revised for computer printers, tractor components. Cinema tickets under Rs 100 would be taxed at 18 percent, while above Rs 100 would be charged at Rs 28 percent.