Budget 2026 Wishlist: GJC Urges GST Cut and MSME Relief for Jewellery Industry
An Overview of Pre-Budget Recommendations by the Gems and Jewellery Industry
The All India Gem & Jewellery Domestic Council (GJC) submitted a comprehensive pre-budget memorandum to the Finance Minister Nirmala Sitharaman, underscoring policy changes such as reduction in Goods and Services Tax (GST) and intensification of MSME support amid rising gold prices. Such proposals aim to ease working capital strains, accelerate the market, and revive demand.
GJC Chairman Rajesh Rokde stressed upon the pivotal role of timely interventions that could safeguard artisan jobs and boost middle-class consumption, ahead of the Union Budget 2026-27 presentation on February 1, 2026. With the aid of Gem & Jewellery Export Promotion Council (GJEPC), these recommendations may render the cost pressure and sustain value chain.
Key Recommendations:
- GST Rationalisation : The principal demand raised by the GJC concerns the rationalisation of GST on gold and jewellery, which presently is levied at 3%. The proposal a reduction to 1.2 - 1.5%, citing the cumulative burden of high gold prices and indirect taxes on consumer demand and trade liquidity.
- Input Tax Credit (ITC) Consideration : Further, drew attention to the inverted duty structure, wherein jewellers incur GST at 18% on input services such as rent, security, transportation, and job work, while the outward supply attracts a significantly lower rate. This results in accumulation of unutilised ITC, leading to working capital blockage and increased compliance complexity.
- MSME Relief : The jewellery sector is MSME-driven, with a large number of family-owned businesses, artisans, and small manufacturers forming the backbone of the industry. Recognising this, the GJC has sought several MSME-oriented measures, including:
- Simplification of GST compliance and return filing
- Clarity on GST applicability to job-work transactions
- Reduction in multiple audit and inspection overlaps
- Temporary relief mechanisms during periods of high gold price volatility
The Council has also recommended measures to ease the tax burden arising from unrealised inventory appreciation, in the light of periods of sharp price escalation, to prevent liquidity stress among small jewellers.
- Tourist GST Refund Scheme and Domestic Demand Stimulation : Another recommendation is the operationalisation of the Tourist GST Refund Scheme, which would enable foreign tourists to claim refunds on GST paid for jewellery purchases made in India. Immediate rollout of Refund Scheme would target foreign buyers to increase jewellery purchases at airports.
- Clarification on Job-Work GST Rate : The GJC has sought clarification on the issuance of a circular affirming the applicability of 5% GST on jewellery job-work services. The absence of uniform interpretation has resulted in inconsistent assessments and field-level harassment of karigars and small job workers.
- Deferral of Tax on Unrealised Inventory Gains : The GJC is seeking a one-year deferral of income tax on unrealised inventory appreciation arising from sharp increases in gold prices during F.Y. 2025-26, recognising that such gains are notional and do not generate actual cash flow.
- Capital Gains Relief on Jewellery Exchange : To encourage formal transactions and recycling of gold, the Council has recommended exemption from capital gains tax on exchange of hallmarked jewellery, provided the proceeds are reinvested in new jewellery.
These pre‑budget suggestions are a multi‑layered strategy encompassing tax rationalisation and facilitation with target relief to the jewellery industry constituting a significant part of both the domestic MSME landscape and India’s merchandise exports.
Source: Pressnote - GJC Submits Comprehensive Pre-Budget Recommendations for Union Budget 2026–27, Published on : 16 Jan, 26
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