Council flags affordability squeeze, working capital stress ahead of Budget 2026
MUMBAI, Jan 19 (The CONNECT) – The All India Gem & Jewellery Domestic Council (GJC), the apex body representing India’s domestic gems and jewellery trade, has submitted a detailed set of pre-Budget recommendations to Finance Minister Nirmala Sitharaman, seeking targeted tax and policy interventions in the Union Budget 2026–27 to restore demand, ease liquidity stress and accelerate formalisation.
In its representation, GJC anchored its proposals around five key pillars: GST reforms to restore affordability and address working capital blockage; direct tax relief on unrealised inventory gains triggered by the surge in gold prices; policy clarity to strengthen formalisation and consumer protection; immediate rollout of the long-pending Tourist GST Refund Scheme; and sector-specific measures to mobilise idle household gold, deepen digital payments and support MSME jewellers.
At the core of the submission is a call to reduce GST on gold and silver jewellery from the current 3% to 1.25%, or alternatively adopt a uniform 1.5% rate across the value chain on a revenue-neutral basis. GJC argued that while there has been no change in GST rates, the sharp rise in gold prices has inflated the absolute tax burden, hurting middle-class and rural demand and locking up working capital for retailers.
To address inverted duty structures, the council has sought refund of accumulated input tax credit on services or a sharp reduction in GST on key input services such as rent, security and logistics from 18% to 5%. It has also urged the government to issue a clear circular reaffirming the 5% GST rate on jewellery job-work services, citing the need to protect karigars from compliance disputes and field-level harassment.
On direct taxes, GJC has proposed a one-year deferral, without interest, of income tax on unrealised inventory appreciation arising solely from the gold price surge in FY 2025–26. It has also sought exemption from capital gains tax when hallmarked jewellery is exchanged and the proceeds are reinvested in new jewellery, a move it says would encourage recycling of gold within the formal system.
To boost tourism-linked retail demand, the council has called for immediate operationalisation of the Tourist GST Refund Scheme at major international airports. Additional recommendations include simplified compliance for MSME jewellers through higher turnover thresholds for returns, protection from duplicate notices after audits, a clear regulatory framework for digital gold, rationalisation of credit card MDR, and introduction of formal EMI options for hallmarked 22-karat jewellery.
The submission positions these measures as aligned with national priorities such as Atmanirbhar Bharat, Make in India and Viksit Bharat @2047, while strengthening India’s standing as a global jewellery hub.
Rajesh Rokde, Chairman, GJC, said the proposals are aimed at restoring balance rather than seeking concessions. “The sharp rise in gold prices has multiplied the absolute GST burden on consumers and created severe working capital stress for jewellers, even though no policy change has occurred. Our recommendations are about restoring proportionality, liquidity and fairness. A modest GST reduction, coupled with relief on notional inventory gains and job-work clarity, can bring millions of transactions back into the formal economy and protect karigar livelihoods,” he said.
Avinash Gupta, Vice Chairman, GJC, said the sector is committed to transparency and digital transformation. “Operationalising the Tourist GST Refund Scheme, enabling EMI for 22-karat jewellery, capping credit-card MDR and regulating digital gold will improve traceability, boost tourism-linked spending and draw younger consumers into the organised market. These steps can also help mobilise domestic gold through formal banking channels over time,” he said.
GJC said it remains ready to work closely with the government to implement calibrated reforms that enhance consumer trust, deepen formalisation and sustain the sector’s economic and cultural contribution.
