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India’s Gold jewelry exports have fallen by almost 6% during April-November 2017 and may go down further as UAE will be imposing 5% VAT from January 1st, 2018. UAE is amongst the major importers of Indian jewelry and this tax imposition will make the jewelry price more for the shoppers.
Experts from the Gem & Jewellery Export Promotion Council(GJEPC) told that the Indian jewelry exports had slashed down after the introduction of the 5% customs duty by UAE government in the beginning of 2017. Now with the upcoming imposition of 5% VAT by UAE government the Indian jewelry sale will be further affected.
The VAT on gold and diamond jewelry is being imposed when Dubai Shopping Festival is on and will be continuing until January 27th and people across the world will be gathering at Dubai to shop in it.
The GJEPC also does not see clearly as to whether the VAT imposed will also be applicable to gold jewelry that will be re-exported from Dubai to other parts of the world. A large amount of Indian jewelry is routed to various global destinations through Dubai.
As per the figures of GJEPC, the gold jewelry export of the country has fallen by nearly 6% to Rs 14733.83 crore during the first 8 months of fiscal 2017-18. The industry experts tell that all 5% VAT has been imposed on gold jewelry purchased in Dubai have but 24-carat gold bars will not be topped with VAT. The VAT guidelines tell that any gold item with % gold purity in a tradable form in global markets will have any VAT.
It is also not clear whether the gold coins will also carry 5%VAT charges or not. The jewelry industry feels that the VAT imposition may initially impact the gold jewelry exports as the customers will be hesitant to pay the increased prices. The advantage that Dubai had in the world market will surely be impacted by this tax.