In a major relief for jewellery exporters, the government has exempted gems and jewellery shipped for display in overseas exhibitions and trade shows, from three per cent Integrated Goods and Services Tax (IGST).
About 25 per cent of India’s annual gems and jewellery exports, which come back unsold and are declared as 'return consignment', would benefit from this IGST exemption. India’s annual gems and jewellery exports are estimated at about $35 billion with return consignment worth $7-8 billion.
“This is a trade-friendly step which will boost promotional activities globally. The move will definitely provide respite to our member exporters,” Pramod Kumar Agrawal, Chairman, Gem and Jewellery Export Promotion Council (GJEPC).
The statement from the Union Government clarified that the activity of sending / taking the goods out of India for exhibition or on consignment basis for export promotion do not constitute supply, as such activity does not fall within the scope of the CGST Act. This is because there is no consideration at that point in time. Since such activity is not a supply, it cannot be deemed “zero rated supply‟ as per the existing IGST provisions.
The circular from the Ministry of Finance also clarifies that activity of sending/taking the goods out of India for exhibitions or on consignment basis for export promotion will not be considered as supply.