The GJEPC representation, led by Colin Shah, Chairman, GJEPC, met Finance Minister Smt. Nirmala Sitharaman on 26th August, in New Delhi, to raise concerns and implications arising on the diamond segment due to expansion of Scope of Equalisation Levy (EL). In a relief to the industry, the Finance Minister clarified that the e-trade of rough diamonds does not attract 2% Equalisation Levy and assured the representation that a clarification will be done on this soon.
Equalisation Levy was introduced and amended in the Finance Act 2020. A 2% Equalisation Levy has been effective from April 1, 2020, in the fiscal year and is applicable on the consideration received/receivable by an e-commerce operator from the following transactions (e-commerce supply or services):
• Online sale of goods owned by the e-commerce operator; or
• Online provision of services provided by the e-commerce; or
• Online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
• Any combination of the above-mentioned activities
During the meeting, GJEPC representatives urged the Hon’ble Minister to issue appropriate amendment/ clarification, to ensure that the diamond sector is not burdened with the EL, even where the rough diamonds are procured through auctions through digital platforms.
Smt. Sitharaman clarified that the legislative intent for introduction of the EL was to only tax the digital economy utilizing the ecommerce means to reach end consumers and should not be applicable on B2B transactions like procurement of rough diamonds through digital platforms for business purposes. She assured to look into the matter positively and discuss the provisions and its interpretation with concerned officials.
Mr. Colin Shah, said, “Due to the application of 2% EL effective from this fiscal year, it will now apply on all overseas e-commerce transactions completed with Indian tax residents or those who purchase using an Indian IP address. This means, the procurement of rough diamonds from global miners and traders, through the e-auction process will attract additional 2% due to application of EL. While the EL is structured as a levy on the foreign entity, the global miners and traders are likely to revise the pricing structure to account for the EL. Leading global diamond miners have asked GJEPC for clarification of this additional 2 percent EL on the procurement of diamonds. This is leading to further tax burden to the already severely hit Indian gems and jewellery exports industry. With the COVID-19 pandemic, for business continuity the entire transactions and business trade is happening online or by e-commerce platforms, with the advent of EL, India would lose its global competitive edge.”
Mr. Shah further added that, “The Hon’ble Finance Minister has taken a note of our concerns with respect to the Equalisation Levy and has assured of taking appropriate measures to make it a win-win situation for both the government of India and the gems and jewellery exports Industry. We are hopeful that the Hon’ble Minister will look into this matter and address our issues.”
Mr. Sabysachi Ray, Executive Director, GJEPC, said, “Over 95% of diamonds imported in India are for manufacturing purposes and are exported and sold in international markets. India enjoys an undisputed leadership position in gems and jewellery exports. With gems and jewellery business likely to see its dawn post the initial setback from the pandemic, as internationally demand for jewellery could increase due to festivals like Christmas, Gifting season and New Year. The 2% EL on diamonds will make the raw material more expensive for an Indian diamond exporter. This gives an advantage for competing nations and could lead as a disadvantage for Indian gems and jewellery exports sector.”
News Souece : gjepc
Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.
.){kind=link}