GST rate for jewellery unchanged at 3 pc, but industry sees indirect gains

Mumbai, Sep 4 (PTI) Even though the GST for gems and jewellery remained unchanged at 3 per cent, jewellers on Thursday welcomed the government's decision to reduce GST rates in other sectors, saying it would indirectly benefit the industry and boost demand.

"The current GST reforms (GST 2.0) offer no direct and immediate relief to gems and jewellery exporters. Importantly, the gems and jewellery sector was excluded from the latest reforms. The reforms do not offset the adverse impact of the US tariffs, since input costs and compliance burdens remain unchanged," All India Gem and Jewellery Domestic Council (GJC) Chairman Rajesh Rokde told PTI.

However, he said, by focusing on stimulating consumption, the GST changes will support the gems and jewellery sector indirectly over the longer term.

"The new rates, effective from September 22, are expected to boost consumption, with the overall fiscal impact of the overhaul estimated at around Rs 50,000 crore," Rokde added.

The GST Council, in its meeting held on Wednesday, kept the rates unchanged at 3 per cent for the gems and jewellery sector.

GJC Vice Chairman Avinash Gupta said, "With the rollout of next-gen GST reforms, we believe, consumers will experience a tangible increase in disposable income, thanks to the combined effect of income tax relief and reduced GST rates. This dual benefit puts more money directly into the hands of households, encouraging aspirational purchases and lifestyle upgrades." The simplified two-tier GST structure and lower tax rates on daily essentials are expected to boost consumer confidence and spending, especially during the festive season, he stated.

"For the gem and jewellery sector, this presents a significant opportunity, as more consumers are now empowered to invest in jewellery, not just as adornment, but as a symbol of prosperity and financial security," Gupta added.

Saiyam Mehra, past Chairman GJC and director of Unique Chains and Jewels Limited, said, the next-gen GST reforms mark a pivotal moment for India's consumption-driven economy and by streamlining tax slabs and easing the burden on essential goods, the government has empowered consumers with greater purchasing power.

"For the gem and jewellery industry, this translates into renewed optimism, where jewellery is not just a luxury, but a preferred investment and cultural expression. We believe this reform will unlock fresh demand, especially from emerging markets and younger buyers seeking value and authenticity," he added.

However, RiddiSiddhi Bullions (RSBL) Managing Director Prithviraj Kothari said that the GST Council's announcement on maintaining 3 per cent GST on gold and silver and 5 per cent on jewellery-making charges has brought stability but comes with mixed results.

"For jewellers, it doesn't change how they do business as there is no relief on margins, despite their hopes of getting a rate cut, in order to stimulate demand, to the end-consumer. Higher costs may still have a detrimental impact on affordability, particularly during the festive season," he said.

For investors, unchanged GST provides clarity to the buyer, and also does not create havoc in the market, however, entry costs remain slightly high compared to global benchmarks, said Kothari.

"On the one hand, the decision should defend the government's revenue stream, but both jewellers and buyers may feel that their growth opportunities remain hindered," he added. PTI SM MR