Latest News | GJEPC Seek Clarification Frm Govt on 2 Pc Equalisation Levy on B2B E-auction of Diamonds
Get latest articles and stories on Latest News at LatestLY. The gem and jewellery exporters body GJEPC on Monday sought clarification from the government on the applicability of 2 per cent equalisation levy on B2B e-auction of diamonds conducted by foreign firms, an industry source said.
New Delhi, Jul 6 (PTI) The gem and jewellery exporters body GJEPC on Monday sought clarification from the government on the applicability of 2 per cent equalisation levy on B2B e-auction of diamonds conducted by foreign firms, an industry source said.
Gem and Jewellery Export Promotion Council (GJEPC) Chairman Colin Shah has raised the issue while giving a presentation to Finance Minister Nirmala Sitharaman.
In the presentation, the council stated that the term 'e-commerce operator' is widely defined to mean a non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or services.
"It is apprehended that equalisation levy can potentially apply to every transaction that has a certain element of an online interface; thus including procurement of rough diamonds through e-auction," according to the presentation.
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This levy was introduced in the 2020-21 Budget and has come into effect from April 1, 2020. The first installment of this tax is due on July 7. The 2 per cent equalisation tax would be levied on consideration received by e-commerce operators from online supply of goods or services.
Commenting on the issue, Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, said that the levy covers provision for online services provided by non-residents to Indian residents.
"The ambit is, therefore, quite significant and could cover e-auction services as well. A lacuna also exists over a point on the consideration on which equalisation levy would apply for platform based business models - whether on the service fee only or full consideration, including the value of goods involved in the transaction.
"Hence, unless clarified, equalisation levy could be seen as applicable on full consideration, including the value of rough diamonds," he said.
Further the industry source said that global miners are amending the terms of contract on account of this new tax which is basically a levy on a foreign entity.
"Few auction house/trading companies barred India-based customers from participating in their June 2020 spot auction process. Competitiveness of Indian goods will suffer as other rough diamond importing countries do not levy such a tax.
"An appropriate amendment/ clarification is requested to ensure that the diamond sector is not burdened with the equalisation levy," the source added.
The other issues being raised by the council include e-commerce policy for jewellery, making MyKYCBank platform compulsory for all gem and jewellery entities, priority sector status by the RBI, promoting easing of doing business for the sector, and certain matters related with Goods and Services Tax (GST).
Exports of gems and jewellery declined by 10.19 per cent to USD 35.5 billion in 2019-20. The sector contributed about 14 per cent in the country's total merchandise exports.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)