Indian Jewellery Exporters Seek New Tax

by Mary Swire, Tax-News.com, Hong Kong

20 February 2012

The Gems and Jewellery Export Promotion Council (GJEPC) has made a plea to the Indian government to simplify their tax regime in order to help transform India into an international gem trading hub.

GJEPC has asked the government to implement Presumptive Tax as recommended by the Sivaraman Committee in an attempt to improve the industry. They claim that the changes would help encourage more investment in the sector, retain trade and skilled labour as well as increasing employment opportunities within India.

The Presumptive Tax system is based on presumed average income instead of actual income. The system differs from traditional taxation processes by assuming that an organisation is making profit. This profit is then taxed at a fixed percentage.

India did introduce a Benign Assessment Procedure following the recommendations by the Committee in 2007. The procedure, which was specific to the diamond industry, taxes those who declare over 6% profit each year. The system relies on the business owners' own records and normally does not subject them to detailed review.

The Council says that 3% would be a more accurate measure of profitability across most of the industry, and urges the government to instal a presumptive tax regime at this level in order to prevent the shift of business to other countries and worsening of the current unemployment problem.

Recommended