Gems, jewellery industry seeks tax exemption on export profits

With a view to ease the pressure on the beleaguered gems and jewellery sector, especially the diamond industry, representatives of Gems and Jewellery Export Council (GJEPC) on Tuesday urged the finance ministry to make profits from exports of the industry tax-free for the last two years.

Union finance minister Pranab Mukherjee on Tuesday met industry representatives to seek pre-budget suggestions from the industry. “We have sought a tax exemption on the export profits for two years on gems and jewellery industry,” said Vasant Mehta, chairman, Gems and Jewellery Export Promotion Council (GJEPC).

Availability of finance is yet another problem the sector in general and diamond industry in particular is facing. “We informed the finance minister the diamond industry is facing tough times due to recession. Around 400,000 workers have already lost their jobs. The industry needs finance to survive. As a result, we have demanded dollar finance for the two years,” said Chandrakant Sanghvi, regional convener, GJEPC.

Presently, industry players are charged 5 per cent to 6 per cent on finance from the international market, while in rupee terms the interest works out to 9 per cent.

“We want the government to provide the industry international parity in interest rates. In dollar terms, we think the rate should be 3.50 per cent to 4 per cent, while in rupee terms it should fall to 6 per cent from 9 per cent,” Mehta added.

Other suggestions made by representatives of the industry include a 1 per cent turnover tax when the industry is back on track and extension of interest subvention for another two years.