The GST rate on diamond jewellery is set at 3%, which applies to the total invoice value. This includes the cost of the diamond, any additional materials such as gold or platinum, and making charges.
Applicability of GST on Diamonds and Diamond Jewellery in India
After the 47th GST Council meeting, the rate of GST on cut and polished diamonds was raised from 0.25% to 1.5%. This change has been made against an initial notification 7/2018- Integrated Tax (Rate), dated 25th January 2018, where the GST rate on diamonds (only cut and polished) was reduced from 3% to 0.25%.
Furthermore, rough or sawn diamonds are levied a 0.25% GST. Also, the gems and jewellery industry continue to attract a GST rate of 1.5% for job work charges and 18% for grading, certification, and bank charges, among others, on input services procured.
While cut and polished diamonds attract a 1.5% GST, the story changes when these diamonds are worked upon for creating wearable jewellery. This is because diamond jewellery is taxed at 3% and entails job work charges. These diamonds generally fit in with other precious or semi-precious stones taxed at different GST rates.
- Loose Diamonds:
- Rough Diamonds: GST is charged at 0.25% for rough, unworked diamonds.
- Polished Diamonds: GST is also 0.25% for polished diamonds that are not mounted or set in jewellery.
- Diamond Jewellery:
- Diamonds set in jewellery (e.g., rings, necklaces) attract a 3% GST on the total value, including making charges and the cost of the diamonds and metal.
- Imports:
- GST is applicable on imported diamonds at 0.25% (or 3% for jewellery) and must be paid at the customs clearance stage.
- Exports:
- Exports of diamonds are zero-rated under GST, allowing businesses to claim refunds on input taxes paid.
- Industrial Diamonds:
- Industrial diamonds (used for tools and equipment) are subject to 0.25% GST.
- Job Work:
- GST on job work related to diamond processing is 1.5% for registered workers and 18% for labour work or repairs.
GST Rate and HSN code for Diamonds
HSN Code | Description | Rate (%) | CESS (%) |
7102 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set | 0.25 | 0 |
71021000 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Unsorted | 0.25 | 0 |
710221 | Unworked Or Simply Sawn, Cleaved Or Bruted | 0.25 | 0 |
71022110 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Industrial: Unworked Or Simply Sawn, Cleaved Or Bruted: Sorted | 0.25 | 0 |
71022120 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Industrial: Unworked Or Simply Sawn, Cleaved Or Bruted: Unsorted | 0.25 | 0 |
710229 | Other | 0.25 | 0 |
71022910 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Industrial: Other: Crushed | 0.25 | 0 |
71022990 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Industrial: Other: Other | 0.25 | 0 |
71023100 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Non-Industrial: Unworked Or Simply Sawn, Cleaved Or Bruted | 0.25 | 0 |
710239 | Others | 0.25 | 0 |
71023910 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Non-Industrial: Others: Diamond, Cut Or Otherwise Worked But Not Mounted Or Set | 0.25 | 0 |
71023990 | Diamonds, Whether Or Not Worked, But Not Mounted Or Set – Non-Industrial: Others: Other | 0.25 | 0 |
Impact of GST on Diamond Jewellery
GST diamond jewellery was levied an excise duty of 1% and VAT, which varied across the states in the range of 1-1.2%. However, some states, like Kerala, charge 5% VAT on diamond jewellery. Furthermore, a 10% import duty was also applicable on diamond jewellery.
However, after the implementation of the GST regime, the applicable rate of GST on diamond jewellery is 3%. Additionally, unfinished precious stones attract a flat GST rate of 0.25%. Like before, diamond jewellery continues to be levied a 10% import duty.
To illustrate the impact of GST on jewellery, consider a piece of diamond jewellery that costs Rs.1,00,000.
| Description | Pre-GST Price (Rs.) | Post-GST Price (Rs.) |
|---|---|---|
| Base Price | 1,00,000 | 1,00,000 |
| (+) Excise Duty @ 1% | 1,000 | – |
| (+) VAT @ 5% | 5,050 | – |
| (+) GST @ 3% | 3,000 | |
| Final Price | 1,06,050 | 1,03,000 |
FAQs
Q1. What is the GST number of diamonds?
There is no GST number for diamonds, though diamonds fall under the HSN code 7102 for GST purposes.
Q2. How does the GST rate increase affect the diamond jewellery industry?
The increase in GST rate raises production costs for manufacturers, leading to higher prices for consumers. It also helps address the issue of input tax credit accumulation, improving cash flow for businesses. However, the higher tax rate may affect the profitability and competitiveness of Indian diamond jewellery in international markets.
Q3. What is the diamond GST?
The diamond GST is 0.25% for loose diamonds, including polished or unpolished, and 3% when set in jewellery.
Q4. Why was the GST on diamond jewellery increased?
The GST on cut and polished diamonds was increased from 0.25% to 1.5% to address the issue of input tax credit accumulation in the diamond jewellery sector. This change helps resolve the inverted duty structure and stimulates industry growth.
Q5. What is the GST on a diamond ring?
The GST on a diamond ring is 3%, applicable to the complete value of the ring, including the diamond, metal, and making charges.
Q6. What is the polished diamond GST rate?
The polished diamond GST rate is 0.25%, applicable to diamonds that are worked but not mounted or set in any form.
