GST on Diamond – Tax Rates, Making Charges & Billing Rules

The wedding of his daughter Meera was rapidly approaching and Baldev Shah, a retired schoolteacher from Surat, was overjoyed. Since he wanted to give her a diamond necklace, he went to a famous jewellery store.

At ₹5,00,000, he discovered the ideal item: a diamond necklace. "Sir, the GST on diamond jewellery is 3%," the salesperson told him as he was ready to make the transaction.

Baldev was taken aback. "GST? On a wedding gift?"

"Yes, sir," the salesman explained. "The GST rate on diamond jewellery is 3%, which includes the cost of the diamonds, the metal, and making charges. Additionally, job work charges attract a 1.5% GST."

Baldev nodded his head, understanding the total cost would be ₹5,15,000.

Later, as he presented the necklace to Meera, he smiled, "Turns out, even diamonds come with a tax!"

Moral: Always be informed about taxes, even when buying gifts.

GST on Diamond– A Short Introduction

The Goods and Services Tax (GST) on diamonds in India varies based on the type of diamond and its processing stage. As of July 18, 2022, the GST Council revised the rates to address issues related to Input Tax Credit (ITC) accumulation in the diamond industry.

GST Rates on Diamonds:

• Rough or Unpolished Diamonds: These attract a GST rate of 0.25%.
   
• Cut and Polished Diamonds: The GST rate for these diamonds was increased from 0.25% to 1.5% to resolve ITC accumulation issues.
   
• Diamond Jewellery: Finished diamond jewellery is taxed at 3% GST, which includes the cost of the diamond, the metal, and making charges.

Impact on the Industry:

The increase in GST on cut and polished diamonds aims to streamline the tax structure and reduce the ITC accumulation faced by the sector. This adjustment is expected to release blocked working capital and stimulate industry growth.

For consumers, the GST paid on diamond jewellery is non-refundable, as there are no provisions to claim GST benefits for personal purchases. However, registered businesses can utilise the input tax credit (ITC) on eligible purchases, helping to offset the GST paid during production or procurement.

GST on Diamond – Create a Table Mentioning Different Categories of Diamond with Price and Applicable GST Rate
 

Note: The GST rates mentioned above are applicable as per the latest notifications and may be subject to changes by the GST Council.

HSN Codes for GST on Diamond – Create a Table Mentioning Diamond Types with Their Respective HSN Codes
 

Impact of GST on Diamond Industry with Examples
 

Notes:
 

• Source References: GST Council Notifications, IndiaFilings, EbizFiling, GJEPC, Economic Times.
• Export Refunds: Only available upon filing correct GST returns.
• Rates as of 2025: Subject to change based on GST Council decisions.

Conclusion of GST on Diamond

GST on diamonds helps exporters by making exports tax-free (0% GST) and allowing them to claim back input tax. For example, if a diamond trader pays ₹54,000 as GST on raw materials, they can get a full refund. This reduces costs and keeps Indian diamonds competitive in global markets.

FAQs Related to GST on Diamond

Q: What is the GST rate on rough or uncut diamonds?

Rough diamonds attract a concessional GST rate of 0.25%.

Q: Is GST applicable to diamond jewellery?

Yes, finished diamond jewellery is taxed at 3% GST.

Q: Can exporters of diamonds claim GST refunds?

Yes, diamond exporters can claim refunds of input tax credits.

Q: What is the GST on diamond cutting and polishing services?

Job work services for diamonds are taxed at 1.5% GST.