The Goods and Services Tax (GST) on diamonds in India is a crucial aspect for traders, jewellers, and consumers alike. This blog post will delve into the GST rates, HSN codes, and specific scenarios related to diamond jewellery, including earrings and polished diamonds.
GST Rates and HSN Codes for Diamonds
The GST rates for diamonds vary based on their form and processing stage:
- Rough or Uncut Diamonds: These attract a GST rate of 0.25%.
- Cut and Polished Diamonds: The GST rate for these diamonds was increased from 0.25% to 1.5% following the 47th GST Council meeting.
- Diamond Jewellery: Finished diamond jewellery, including earrings, is taxed at 3%.
The Harmonized System of Nomenclature (HSN) codes for diamonds are as follows:
- 7102: Diamonds, whether or not worked, but not mounted or set.
- 71023910: Diamonds, cut or otherwise worked but not mounted or set.
How Much GST on Diamond Jewellery?
Diamond jewellery, including items like rings, necklaces, and earrings, is subject to a GST rate of 3%. This rate applies to the final product, which includes the cost of the diamonds and the craftsmanship involved in creating the jewellery.
Checkout How much GST is charged on Gold Jewelry?
GST on Diamond Earrings
Diamond earrings, being a part of diamond jewellery, also attract a GST rate of 3%. This rate is consistent across all types of diamond jewellery, ensuring uniformity in taxation.
GST on Diamond in India
In India, the GST on diamonds is structured to cover various stages of the diamond’s lifecycle, from rough to polished and finally to finished jewellery. This comprehensive approach ensures that all transactions involving diamonds are appropriately taxed.
Why GST on Diamond is Low
The GST on rough and uncut diamonds is kept low at 0.25% to support the diamond processing industry in India. This low rate helps in reducing the cost burden on diamond processors and encourages the growth of the industry. Additionally, the increase in GST on cut and polished diamonds to 1.5% aims to balance the tax structure and address the issue of input tax credit accumulation.
Polished Diamond GST Rate
The GST rate for polished diamonds is currently set at 1.5%. This rate was revised from the earlier 0.25% to ensure a fair tax structure and to mitigate the challenges faced by the diamond industry regarding input tax credits.
Recent Updates on GST for Diamonds
The last significant update on GST for diamonds was made during the 47th GST Council meeting, which took place on July 18, 2022. During this meeting, the GST rate on cut and polished diamonds was increased from 0.25% to 1.5%. This change was implemented to address the issue of input tax credit (ITC) accumulation faced by the diamond sector due to the inverted duty structure.
In conclusion, the GST on diamonds in India is designed to support the industry while ensuring fair taxation at various stages of the diamond’s journey from rough to finished jewellery. Whether you’re purchasing diamond earrings or investing in polished diamonds, understanding these GST rates and HSN codes can help you navigate the market more effectively.
