India is proposing a 15-year tax exemption for overseas rough-diamond sellers in special notified zones, a move aimed at consolidating its status as the world’s centre for diamond processing and trading amid industry efforts to curb business loss to Dubai and Antwerp.
India is moving to expand tax relief for overseas rough-diamond sellers, a step that could strengthen the country’s position as the centre of global diamond processing and trading. The government has tabled legislation that would give foreign companies a 15-year tax exemption on sales made in special notified zones, or SNZs, such as those at the Bharat Diamond Bourse in Mumbai and the Surat Diamond Bourse. According to Rapaport, the proposal covers miners, brokers, aggregators, tender operators, auction houses and sightholders, the De Beers contract customers that often resell their rough.
If approved, the change would mean that revenue from rough-diamond sales in SNZs would not be included in the income base used to calculate tax liability. The company would still need to complete the transaction inside an SNZ and provide information when requested. Rapaport reported that the measure would take effect on October 1 and run until March 31, 2041, although it still needs parliamentary ratification.
The proposal builds on earlier steps by Indian tax authorities to make SNZs more attractive to overseas suppliers. In May, the Central Board of Direct Taxes issued clarifications on the safe harbor regime for foreign companies selling raw diamonds in these zones, setting a minimum 4% profit assumption for qualifying sales. That followed an earlier government stance that the display of uncut diamonds inside SNZs would not itself be taxable, a policy intended to draw more international miners and traders to India.
Industry representatives have long argued that looser tax rules are needed to keep rough-diamond business in India rather than losing it to Dubai or Antwerp. Pranay Narvekar, an India-based analyst quoted by Rapaport, said the proposed exemption would “streamline the operations and reduce unnecessary movement of rough”. Sabyasachi Ray of the Gem and Jewellery Export Promotion Council said the group had pressed for changes that would allow smaller manufacturers to buy directly from miners, auctioneers and traders, adding that the council expects India to become a stronger force in rough-diamond trading if the bill passes.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
