New GST regulations hard for jewellers as movement from hubs to be taxed

By

Isabelle Crossley

Published
Sep 28, 2017

Inter-state taxable job work services will not be made exempt from compulsory Goods and Services Tax (GST) registration and this has led to claims that movement of jewellery from manufacturing hubs will subsequently slow down.

It is common for luxury jewellery brands to have different jewellery items made in different manufacturing hubs as they tend to have different specialities and the brands want to have speciality craftsmen make their intricate items. For example, Varanasi is famed for its filigree jewellery and so brands will have any filigree items made there, although the brand itself may be located in New Delhi or Mumbai. These items then need to be transported to where the jewellery brand is based and it is at that point that they may now be subject to GST. Moreover, if the job workers are not registered, which may be the case for local craftsmen, GST payments may prove challenging.

Nitin Khandelwal, the Chairman of the All- India Gem and Jewellery Trade Federation, commented about the government’s recent GST exemption: “This exemption was not extended to job work in relation to jewellery covered under chapter 71, which do not require e-way bill.” However, some jewellers have been left confused as the implications of the exemption are debated.

Bhavin Mehta, a chartered accountant, claimed that Section 143 of the CGST Act, 2017, does indeed allow for the movement of semi-finished jewellery items to artisans in a different state to where the jeweller is registered, even for unregistered craftsmen, as long as the jeweller is properly registered for GST.

However, what happens when the finished jewellery is sent back to the jewellery brand and how much tax is deductible is still being figured out and will indeed affect the manufacture of jewellery across India.