Cut GST in diamond B2B deals: Traders

Diamond traders have approached the government to do away with the 3 per cent goods and services tax (GST) on B2B transactions, arguing that sending polished diamonds from Surat manufacturing unit to their branch offices in Mumbai is attracting GST, making their business unprofitable, at a time when global demand for diamonds has slowed.

"This 3 per cent GST is creating a lot of problems. The government should do something to ease them," Dinesh Navadiya, president, Surat Diamond Association, told ET.

Industry experts said that under GST, serial number of the delivery challan for diamonds will have to be maintained as per rule. They said there's confusion on whether the challan should be issued in the name of the broker. If not, then in whose name should it be issued since the broker may take the goods to various prospective buyers.

The value in the delivery challan may not be the full worth of the item for security reasons. It may be difficult for various recipients to issue delivery challans while returning the goods even where they reject it on the spot, since they will be shown multiple items for approval on a daily basis.

Chartered accountant Bhavin Mehta, said that a mechanism needs to be fixed so that diamond trade may seek a clarification from the government that the broker is not an agent making supplies on behalf of the seller, but is merely a courier transporting the goods for a fixed fee.

Therefore, sending such goods through a broker on approval basis is not taxable under GST.