Editor’s Note
The GST Council has announced a significant reduction in the IGST rate for certain imported diamonds, effective from September 22, 2025. This move aims to support the diamond processing industry by lowering the tax burden on key raw materials.
The 56th GST Council meeting has announced important updates with changes effective from 22nd September 2025:
The IGST on natural cut and polished diamonds up to 25 cents (1/4 carat) imported under the Diamond Imprest Authorisation Scheme has been reduced from 18% to Nil.
The applicability of GST on diamonds and diamond jewellery can be a little tricky, as this industry falls under several GST tax slabs. Let’s untangle the levy of GST on diamond jewellery.
After the 47th GST Council meeting, the rate of GST on cut and polished diamonds was raised from 0.25% to 1.5%. This change has been made against an initial notification 7/2018- Integrated Tax (Rate), dated 25th January 2018, where the GST rate on diamonds (only cut and polished) was reduced from 3% to 0.25%.
Furthermore, rough or sawn diamonds are levied a 0.25% GST. Also, the gems and jewellery industry continue to attract a GST rate of 1.5% for job work charges and 18% for grading, certification, and bank charges, among others, on input services procured.
While cut and polished diamonds attract a 1.5% GST, the story changes when these diamonds are worked upon for creating wearable jewellery. This is because diamond jewellery is taxed at 3% and entails job work charges. These diamonds generally fit in with other precious or semi-precious stones taxed at different GST rates.
Before the introduction of GST, diamond jewellery was levied an excise duty of 1% and VAT, which varied across the states in the range of 1-1.2%. However, some states, like Kerala, charge 5% VAT on diamond jewellery. Furthermore, a 10% import duty was also applicable on diamond jewellery.
However, after the implementation of the GST regime, the applicable rate of GST on diamond jewellery is 3%. Additionally, unfinished precious stones attract a flat GST rate of 0.25%. Like before, diamond jewellery continues to be levied a 10% import duty.
To illustrate the impact of GST on jewellery, consider a piece of diamond jewellery that costs Rs.1,00,000.
| Description | Pre-GST Price (Rs.) | Post-GST Price (Rs.) |
|---|---|---|
| Base Price | 1,00,000 | 1,00,000 |
| (+) Excise Duty @ 1% | 1,000 | – |
| (+) VAT @ 5% | 5,050 | – |
| (+) GST @ 3% | – | 3,000 |
| Final Price | 1,06,050 | 1,03,000 |
From the above illustration, we can see that the price has come down under the GST regime due to the removal of cascading effect of taxes.