Hyderabad, Jan 16 .) The All India Gem & Jewellery Domestic Council (GJC) on Friday s submitted a comprehensive set of pre-budget recommendations to the Ministry of Finance ahead of the union Budget 2026–27, seeking GST rationalisation, direct tax relief, and targeted measures to accelerate formalisation and MSME growth in India’s gems and jewellery sector.
In its representation to Finance Minister Nirmala Sitharaman, the industry body highlighted mounting working capital stress caused by elevated gold prices, which have sharply increased the absolute GST burden on consumers and jewellers despite unchanged tax rates. GJC argued that restoring tax proportionality is critical to reviving demand, particularly in middle-class and rural markets.
Among its key proposals, GJC has called for a reduction in GST on gold and silver jewellery from 3% to 1.25%, or alternatively a uniform 1.5% rate across the sector on a revenue-neutral basis.
The council has also sought relief from the inverted duty structure by recommending refunds of accumulated input tax credit on services or a reduction in GST on essential input services such as rent, security, and logistics.
On the direct tax front, GJC has proposed a one-year, interest-free deferral of income tax on unrealised inventory gains arising from the sharp rise in gold prices during FY 2025–26.
It has also recommended exemption from capital gains tax on the exchange of hallmarked jewellery when proceeds are reinvested into new jewellery, to encourage formal transactions and recycling of domestic gold.
The submission further emphasised the need for policy clarity to protect artisans and small businesses, including a clear circular affirming 5% GST on jewellery job-work services.
GJC warned that inconsistent interpretation at the field level has led to compliance uncertainty and harassment of karigars.
To boost tourism-led retail demand, the council has urged the immediate operationalisation of the long-pending Tourist GST Refund Scheme at major international airports.
Additional recommendations include simplified compliance norms for MSME jewellers, higher turnover thresholds for returns, safeguards against duplicate notices post-audit, and a formal policy framework for digital gold.
GJC has also advocated rationalisation of merchant discount rates (MDR) on credit card transactions and the introduction of formal EMI options for hallmarked 22-karat jewellery, steps it believes will accelerate digital adoption and improve traceability across the value chain.
According to the council, these measures would not only strengthen domestic demand and MSME viability but also support national priorities such as Atmanirbhar Bharat, Make in India, and Viksit Bharat @2047, while reinforcing India’s position as a global jewellery hub.
. KNR CDS