Govt relaxes norms on import and trade of rough diamonds2 min read . Updated: 16 Oct 2015, 11:03 PM IST
Miners can import and trade diamonds in the country without inviting income tax assessments on unsold diamonds
New Delhi: In a move to make India a global trading hub of rough diamonds, the government has allowed miners to import and trade the precious stones in the country without inviting income tax assessments on unsold diamonds.
Mint reported on 16 January that government is considering such a move.
India polishes 85% of the world’s rough diamonds, but only 15% of them are imported directly, the rest being bought by middlemen.
Though the foreign trade policy allows consignment import of rough diamond into India, due to the absence of a custom notification, the free import and sale of rough diamonds on a consignment basis has not been possible in India.
As a result, the diamond manufacturers of Gujarat have to travel to Dubai, Belgium or Israel to purchase raw material, which imposes huge extra costs. This step is likely to help the rough diamond polishing industry in Surat.
The finance ministry, in a statement said income arising out of the activity of mere display of uncut diamonds (without sorting or sale) inside a Special Notified Zone carried-out on or after 1 April 2015 will not be taxable under the provisions of the Income-Tax Act, 1961. “Legislative amendment in this regard will be carried-out through Finance Bill, 2016," it added.
“To facilitate the participation of leading diamond mining companies of the world in this zone (SNZ), the matter of taxation of income arising from the activity of mere display of uncut diamonds (without sorting or sale) in the Special Notified Zone was being considered by the government," it added.
Gems and Jewellery Export Promotion Council (GJEPC) chairman Vipul Shah said the council had been demanding such a move for a long time. “This will help large mining companies to directly sell in India as it will bring down transaction cost for them. This will also help in boosting our exports," he added.
The rough diamond auctions will be carried out at the newly developed India Diamond Trading Centre’s (IDTC) SNZ at Bharat Diamond Bourse in Mumbai. The 4,000 square feet hall has 16 chambers with state-of-the-art security and will have bomb-proof walls.
Since many of these miners are from Russia, apart from Africa and Australia, the issue had been discussed during Russian President Vladimir Putin’s visit to India last year. The notification holds importance ahead of a planned visit by Prime Minister Narendra Modi to Russia before the end of this year.