As India’s diamond industry continues to expand and modernise, staying informed about the applicable Goods and Services Tax (GST) rates and HSN (Harmonised System of Nomenclature) codes has become increasingly important. The government’s efforts to streamline taxation mean that diamonds, whether uncut, polished, or set in jewellery are now categorised under specific tax slabs. This article provides a clear overview of the latest diamond GST rates for 2025 and their corresponding HSN codes. Whether you are involved in manufacturing, retail, or purchasing, understanding these tax rules can support compliance and simplify transactions across the diamond value chain.
What is the GST on Diamond?
The GST rate on diamond jewellery is set at 3%, which applies to the total invoice value. This includes the cost of the diamond, any additional materials such as gold or platinum, and making charges.
When calculating GST, making charges are treated as part of the jewellery’s overall value. For instance, if the price of a diamond ring includes Rs.1,00,000 for the diamond and gold and Rs.10,000 as making charges, GST at 3% will be applied to the total Rs.1,10,000.
For consumers, 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 rough diamonds
- GST rate: Rough diamonds attract a GST rate of 0.25%
- Applicability: The GST rate is applicable at the point of sale and purchase of rough diamonds
- Compliance: Businesses dealing in rough diamonds must register for GST and comply with the filing requirements
- Input Tax Credit: Businesses can claim the Input Tax Credit (ITC) on GST paid on purchases of rough diamonds
- Export: Rough diamonds are zero-rated under GST, facilitating a competitive edge in international markets
GST on polished diamonds
- GST rate: Polished diamonds attract a GST rate of 3%.
- Applicability: The GST rate is applicable on the sale and purchase of polished diamonds
- Compliance: Sellers must ensure proper invoicing and GST return filing
- Export: Polished diamonds are zero-rated under GST to boost exports
- Input Tax Credit: ITC can be claimed on GST paid for inputs used in polishing diamonds
- Inventory: Businesses must maintain detailed records of inventory for compliance purposes
For troubleshooting GST compliance issues, learn about potential challenges like the GST site not working and how to resolve them.
Input Tax Credit (ITC) in diamond Industry
- Eligibility: Businesses can claim Input Tax Credit (ITC) on GST paid for inputs and capital goods
- Documentation: Proper documentation is essential to claim ITC.
- Conditions: ITC can be claimed only if the supplier has deposited GST with the government
- Reconciliation: Regular reconciliation of purchase and sales data is required
- Utilisation: ITC can be utilised for payment of output GST liability
To track GST refunds for ITC claims, check out the guide on how to track GST refund status to streamline your processes.
Compliance and documentation
- GST registration: Mandatory for businesses exceeding the threshold limit
- Invoicing: Proper GST-compliant invoices must be issued for all transactions
- Filing returns: Regular filing of GST returns (GSTR-1, GSTR-3B) is required
- Record keeping: Maintain detailed records of sales, purchases, and ITC claims
- Audits: Businesses may be subject to GST audits and inspections
- Training: Employees should be trained on GST compliance and documentation requirements
For understanding key GST features relevant to compliance, explore the features of GST to streamline your operations.
GST impact on diamond jewellery
| Aspect | Before GST | After GST |
| Tax structure | Multiple taxes (VAT, Excise) | Single tax (GST) |
| Tax rate | Varied (1%-12%) | Standardised (3%) |
| Compliance | Complex, multiple filings | Simplified, single filing |
| Input tax credit | Limited ITC availability | |
| Export | Multiple procedures | Zero-rated, streamlined |
| Working capital | Blocked in taxes | Improved due to ITC |
| Business loan | Higher interest due to complexity | Potential lower rates due to simplicity |
GST rate and HSN code for diamonds
Diamonds, being a high-value commodity, have specific GST rates and HSN codes for categorisation under the Indian GST regime. Below is a detailed table outlining the GST rates and HSN codes applicable to various types of diamonds:
| Description | HSN code | GST rate |
| Synthetic or reconstructed diamonds (Unworked or simply sawn, cleaved, or bruted) | 7102 | 0.25% |
| Diamonds (Unworked or simply sawn, cleaved, or bruted) | 7102 | 0.25% |
| Diamonds (Industrial, unworked or simply sawn, cleaved, or bruted) | 7102 | 0.25% |
| Diamonds (Non-industrial, cut, or otherwise worked but not mounted or set) | 7102 | 0.25% |
| Synthetic or reconstructed diamonds (Non-industrial, cut, or otherwise worked but not mounted or set) | 7102 | 0.25% |
| Waste and scrap of diamonds | 7102 | 0.25% |
How to calculate GST on diamond jewellery?
- Determine the value of the diamond jewellery, including the cost of diamonds and making charges.
- Apply the GST rate of 3% to the total value.
- Add the GST amount to the value to get the total price.
- Example: If the value is ₹1,00,000, GST = 3% of ₹1,00,000 = ₹3,000.
- Total price = ₹1,00,000 + ₹3,000 = ₹1,03,000.
- Use a GST calculator to simplify the calculation process.
Key factors that impact GST rates on diamonds
Understanding how GST is applied in different scenarios is important. Here are the common cases explained in simple terms:
Case 1: Composite supply
- When diamond jewellery is sold with services like making charges, it is treated as a single product.
- The GST rate for the main item (diamond jewellery) is applied to the entire value.
Example:
Diamond necklace: Rs.5,00,000
Making charges: Rs.50,000
Total = Rs.5,50,000
GST at 3% = Rs.16,500
Case 2: Mixed supply
If multiple items with different GST rates are sold together, the highest GST rate is applied to the full package.
Example:
Diamond jewellery: Rs.1,00,000
Luxury watch (GST 18%) is bundled together
GST on total Rs.1,00,000 at 18% = Rs.18,000
Case 3: Making charges
GST is charged on the total price, which includes both the jewellery and the making charges.
Example:
Diamond bracelet: Rs.3,00,000
Making charges: Rs.20,000
Total = Rs.3,20,000
GST at 3% = Rs.9,600
Case 4: Used or old diamond jewellery
- Buying old diamond jewellery for personal use is not taxed.
- If a jeweller buys used jewellery and resells it, GST is charged on the resale value.
- The jeweller can also claim input tax credit (ITC) for GST paid on the purchase.
Case 5: Exchange of old jewellery
When old jewellery is exchanged for new, GST is only applied to the new item.
Example:
Old jewellery value: Rs.1,00,000
New jewellery value: Rs.2,00,000
GST is charged only on Rs.2,00,000
GST at 3% = Rs.6,000
Case 6: Job work in diamond industry
- Job work like cutting and polishing attracts 1.5% GST.
- If the work involves repair or reworking old jewellery, GST increases to 18%.
Example:
Cutting/polishing service: GST at 1.5%
Repairing old jewellery: GST at 18%
Advance rulings related to GST on diamonds
- GST classification: Advance rulings help in classifying diamond types under GST.
- Rate clarification: Specific rulings provide clarity on applicable GST rates for different diamond forms.
- Export procedures: Rulings aid in understanding GST procedures for diamond exports.
- ITC eligibility: Clarifications on ITC claims for diamond businesses.
- Compliance: Helps in understanding compliance requirements and avoiding litigation.
- Business strategy: Advance rulings assist in strategic planning and pricing.
GST on diamond imports and exports
- Import GST: Applicable GST on diamond imports must be paid at customs.
- Export GST: Diamonds exported are zero-rated under GST.
- Documentation: Proper documentation is required for claiming GST refunds on exports.
- ITC: Importers can claim ITC on GST paid during import.
- Compliance: Adhering to import and export regulations is crucial.
- Business loan: Importers and exporters can avail of business loans for managing GST-related cash flow.
Proper documentation is critical for GST refunds on exports. To simplify compliance, understanding the place of supply in GST is essential for businesses operating across borders.
Conclusion
Understanding the GST implications on the diamond industry is crucial for compliance and optimising financial management. Proper documentation, compliance with GST regulations, and leveraging the Input Tax Credit (ITC) can enhance business operations. Additionally, businesses can benefit from taking a business loan to manage working capital effectively in this dynamic industry.
