India to Reduce Import Tax on Polished Diamonds to 5%

March 02, 03 by Nikki Glekin

The Indian diamond industry has welcomed the reduction in import duty on cut and polished diamonds from 15 percent to 5 percent. The reduction is part of this year's budget and is due to come into effect at the start of the financial year, April 2003.

Indian Finance Minister Jaswant Singh's address to Parliament, while presenting the federal budget for fiscal year 2003-04, included the elimination of the 5 percent customs duty on rough, colored gem stones and the 15 percent customs on semi-processed, half-cut or broken diamonds.

Indian polishing plant

Pravin Nanavati, chairman of Surat Diamond Association says, ''this will provide an impetus to the industry and also will benefit the large-scale exporters. It will encourage the people already in the business to go ahead in the field of jewelry production. Value addition to the rough diamonds besides cutting and polishing will definitely be an additional source of income for the exporters”.

Ashwin Shah, senior member of the Bombay Diamond Merchants' Association said that the diamond trade is expected to witness a 25 percent increase in imports of rough diamonds from the US and South Africa and "gem and jewelry workers will get more work as job opportunities expand with more raw stock coming into the country." Shah said.

Finance Minister Singh reassured the Indian diamond industry that there would be no withdrawal of benefits under the Income Tax Act. "Keeping in view the substantial value addition that takes place in the case of cutting and polishing of diamonds and gems, it is also proposed to extend the benefits under Sections 10A and 10B of the Income Tax Act to these activities,” he said in his address to parliament.

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