Indian Minister Agrees to Diamond Industry Turnover Tax

In a move that could radically shake up the domestic diamond market, India's commerce and industry minister has agreed to the industry's demand for a shift from tax on income to a turnover-based tax. The commerce secretary, SN Menon has already proposed the planned change to India's finance minister.

The main difference between the two systems is that with the turnover-based scheme, negative turnover is taxed.

In Israel the diamond industry is taxed according to the turnover system; all other businesses in the country are subject to an income tax.

The Indian exports-driven diamond industry is valued at some $17 billion annually and some claim that the income tax is harming business. If the system was changed, the move could lead to an increase in direct foreign investment in the country.

“The global gems industry is witnessing a shift from Belgium and Israel. India would benefit from this trend and attract substantial FDI,” Bakul Mehta, chairman, Gems and Jewellery Export Promotion Council, said, reports India's Financial Express.

Currently, domestic sales account for just 10 percent of the Indian diamond industry's turnover. The bulk of the diamond business is the processing of imported rough diamonds into cuts and polished diamonds.