India’s domestic gems and jewellery trade body submitted comprehensive budget proposals Thursday seeking tax cuts and policy changes to ease financial pressures on retailers and revive consumer demand.
The All India Gem & Jewellery Domestic Council (GJC) presented its recommendations to Finance Minister Nirmala Sitharaman on January 16 ahead of the Union Budget presentation for fiscal year 2026 to 2027. The proposals center on reducing the Goods and Services Tax (GST) burden that has intensified as gold prices climbed sharply over the past year.
The council proposes cutting GST on gold and silver jewellery from the current three percent rate to 1.25 percent, or alternatively implementing a uniform 1.5 percent rate across the entire sector. Officials argue this adjustment would restore affordability without reducing government revenue, as lower rates could bring more transactions into the formal economy. The absolute tax burden on consumers has grown substantially despite unchanged policy, purely because gold prices have risen.
Working capital constraints represent another critical challenge facing jewellers. The GJC recommends either refunding accumulated Input Tax Credit (ITC) on services or slashing GST on key inputs like rent, security and logistics from 18 percent to five percent. Current regulations create an inverted duty structure where businesses pay higher taxes on inputs than they collect on outputs, blocking substantial capital.
The proposals include direct tax relief addressing inventory valuation issues. When gold prices surge, jewellers face income tax on unrealized paper gains from existing stock. The council seeks a one year deferral of tax on such inventory appreciation for the 2025 to 2026 fiscal year, without interest charges. Additionally, the GJC wants capital gains tax exemptions when customers exchange hallmarked jewellery and immediately reinvest proceeds in new pieces.
Protecting craftsmen known as karigars emerged as a priority concern. The council requests a clear government circular affirming that five percent GST applies to jewellery job work services. Field level confusion has reportedly led to harassment of artisans by tax officials uncertain about proper rates.
Tourism related reforms figure prominently in the submission. The GJC urges immediate operationalization of the Tourist GST Refund Scheme at major international airports, noting that foreign visitors currently face price disadvantages compared to shopping in the United Arab Emirates or Singapore where automated refund systems function efficiently. The council suggests launching pilot programs initially at Delhi, Mumbai and Bengaluru airports where tourist footfall and jewellery sales volumes justify the infrastructure investment.
Proposals targeting small and medium enterprises include simplified compliance requirements, higher turnover thresholds before mandatory detailed returns, and protection from duplicate notices after audits conclude. The council also advocates for policy frameworks governing digital gold products, rationalized Merchant Discount Rates (MDR) on credit card transactions, and introduction of formal equated monthly installment schemes for hallmarked 22 karat jewellery purchases.
Chairman Rajesh Rokde emphasized the recommendations seek fairness rather than concessions. He argued that modest GST reduction combined with relief on notional inventory gains and job work clarity would bring millions of transactions into the formal economy while protecting craftsman livelihoods and restoring jewellery’s traditional role as an accessible savings vehicle for Indian households.
Vice Chairman Avinash Gupta highlighted the sector’s commitment to formalization and transparency. He stated that operationalizing tourist refunds, enabling installment payments for 22 karat items, capping credit card fees and regulating digital gold would enhance traceability, boost tourism exports, and attract younger consumers to the organized market. These measures could reduce India’s imported bullion dependence over time by mobilizing domestic gold through transparent banking channels.
The submissions align with national economic development programs including Atmanirbhar Bharat, Make in India, and Viksit Bharat at 2047. The council represents thousands of members across manufacturing, retail and trading segments throughout India’s gems and jewellery industry, which employs millions and contributes significantly to exports and cultural heritage.
Recent data shows India’s gems and jewellery exports grew 19.64 percent to 2.5 billion dollars in November 2025. However, the sector faces challenges from high United States tariffs, evolving consumer preferences, and shifting global supply chains that threaten India’s traditional competitive advantages in craftsmanship and design.
A separate export focused body, the Gem and Jewellery Export Promotion Council (GJEPC), also submitted pre budget recommendations targeting customs duty rationalization and procedural reforms to position India as a global diamond trading hub. That organization seeks amendments to the Customs Act of 1962 to enable risk based clearances, artificial intelligence powered digital appraisals, and self certification for trusted exporters.
The government’s response to these industry recommendations will become clear when the finance minister presents the Union Budget to Parliament in the coming weeks. The jewellery sector awaits signals on whether policymakers will prioritize demand revival and formalization through tax adjustments or maintain current revenue structures despite mounting industry pressure for reform.
