Jewellers' Council Submits Pre‑Budget Recommendations Ahead of Union Budget 2026–27

The All India Gem & Jewellery Domestic Council (GJC) has submitted its pre‑Budget recommendations to Finance Minister Nirmala Sitharaman in the run‑up to the Union Budget 2026–27. The submission includes several tax and compliance measures designed to support the domestic gems and jewellery industry.

The council stated that the proposals address structural issues aggravated by the sharp increase in gold prices over the past year. It added that current market conditions have raised effective tax burdens and strained working capital for jewellers operating across the country.

Proposed GST Rationalisation Measures

The GJC has emphasised the need to rationalise Goods and Services Tax (GST) to ease pressure on jewellers. A major request is the reduction of GST on gold and silver jewellery from the current 3% to 1.25% or a uniform 1.5% across the sector.

The council said this measure could help offset inflationary pressures and improve demand in middle‑income and rural regions. It also highlighted that high gold prices have amplified the impact of existing GST rates, increasing the final cost to consumers and limiting market participation.

Direct Tax Recommendations and Inventory‑Related Relief

The council has proposed that income tax on unrealised inventory gains arising from gold price appreciation in FY26 be deferred by 1 year. It explained that jewellers’ working capital remains heavily tied up in inventory, making taxation on notional gains burdensome.

The recommendation aims to align tax obligations with actual realised gains rather than price‑linked fluctuations. In addition, the GJC has requested capital gains tax exemption when hallmarked jewellery is exchanged and reinvested, stating that such a change would support formal, transparent transactions within the industry.

Measures To Strengthen Formalisation and Correct Duty Imbalances

GJC’s submission includes suggestions to strengthen formalisation efforts within the domestic jewellery sector. The council called for faster implementation of existing schemes intended to improve compliance and support small jewellers.

It also urged a formal clarification on the 5% GST rate applicable to job‑work services, citing persistent ambiguity in its interpretation. According to the GJC, these gaps have resulted in operational challenges for businesses seeking to comply with uniform tax standards.

Addressing Input Tax Credit and Service‑Related Costs

The council has raised concerns about accumulated input tax credit (ITC) on services used by jewellers. It requested a refund mechanism for such accumulated ITC or, alternatively, a reduction in GST on services including rent, security, and logistics, which currently attract an 18% rate.

The GJC noted that the mismatch between output tax and input service tax has created an inverted duty structure for many jewellers. It stated that resolving this issue would improve liquidity and reduce compliance‑related financial strain on smaller entities.

Read More: Gold Price Surge Lifts Indian Household Wealth By ₹117 Lakh Crore.

Conclusion

The GJC’s recommendations for the Union Budget 2026–27 focus on easing tax‑linked pressures and supporting jewellers affected by rising gold prices. Its proposals span GST changes, direct‑tax relief, clarification of industry‑specific rules, and improvements in compliance‑linked processes.

By addressing these structural concerns, the council aims to create a more balanced tax environment for domestic jewellers. The government will consider these submissions as part of its broader Budget formulation process.

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