GST On Diamonds In India: Applicability Rates, and HSN Code

The diamond and jewellery industry is one of India’s most valuable export-driven sectors, contributing significantly to employment, foreign exchange earnings, and global trade leadership. Given the high value and intricate supply chain involved in diamonds from mining and import to cutting, polishing, and retail taxation, this sector demands clarity and precision. The introduction of the Goods and Services Tax (GST) brought uniformity to indirect taxation, but it also introduced multiple rate structures and compliance requirements that jewellers and traders must navigate carefully. Let’s it to know about GST on Diamonds in the upcoming part of the article.

Understanding how GST applies to different forms of diamonds and diamond jewellery is essential for ensuring accurate tax payments, claiming eligible input tax credits, and avoiding compliance disputes. Over the years, the government has implemented GST provisions to address industry-specific challenges, particularly the issue of inverted duty structure and blocked working capital. The decisions made in the 56th GST Council meeting further reflect an intent to support exporters and rationalise tax burdens without compromising revenue objectives. For more details, read: Press Release: Press Information Bureau

This article provides a detailed and practical overview of GST on diamonds in India, covering applicable tax rates, HSN classifications, treatment of job work and making charges, input tax credit rules, and recent policy updates. It also highlights how TMWala can assist jewellers and diamond businesses in managing GST obligations efficiently while staying aligned with evolving regulations.

Overview Of GST On Diamonds In India

GST on diamonds in India is governed by the nature of the diamond (rough, cut, polished, or set into jewellery) and the type of transaction involved. Diamonds may fall under different tax slabs depending on whether they are imported, supplied domestically, or used for manufacturing jewellery.

The government has periodically revised GST rates to resolve challenges such as the inverted duty structure, which led to the accumulation of unused ITC for jewellers and exporters. These adjustments aim to balance revenue collection with industry growth and global competitiveness.

For businesses dealing with frequent compliance updates and filings, platforms like TMWALA help streamline GST reporting, rate tracking, and regulatory updates under one integrated system.

| Also, read a related article regarding the GST Rate on Gold

Key Policy Update By The GST Council

One of the most significant developments came from the 56th GST Council meeting. To ease the ITC burden in the diamond sector, the Council introduced targeted relief measures.

Key change effective from 22 September 2025:

• IGST on the import of natural cut and polished diamonds up to 25 cents (¼ carat) under the Diamond Imprest Authorisation Scheme (Read more: Press Release: Press Information Bureau) has been reduced from 18% to Nil.

This decision directly supports exporters by lowering upfront tax costs and freeing blocked working capital.

Applicability Of GST Across Different Diamond Categories

Understanding the applicability of GST requires distinguishing diamonds based on their processing stage and end use.

GST on Rough Diamonds

GST on rough diamond is levied at a concessional rate of 0.25%. This applies to rough or sawn diamonds, whether industrial or non-industrial, classified under HSN 7102. The low rate reflects the unfinished nature of the product and supports domestic processing.

GST on Polished and Cut Diamonds

GST on polished diamonds and GST on cut and polished diamonds currently attract a GST rate of 1.5%. This rate was increased from 0.25% following policy rationalisation to correct the inverted duty structure. These diamonds are typically traded before being set into jewellery and form a major share of India’s export basket.

GST On Diamond Jewellery

GST on diamond jewellery is charged at a rate of 3%. Once diamonds are mounted or set into jewellery, they are classified as finished goods under HSN 7113. This rate applies to the full transaction value, including making charges, regardless of whether those charges are shown separately on the invoice.

GST Rate On Diamond And Associated Services

GST rate on diamonds varies depending on the product form and service involved. While the diamond itself may be taxed at a lower rate, associated services often attract higher GST.

• Job work related to cutting and polishing diamonds is taxed at 1.5% under Section 9988 of the SAC.
• Services such as grading, certification, banking, and logistics attract GST at 18%.
• Repair or reworking of old jewellery is treated as labour service and taxed at 18%, not as job work.

Jewellers must carefully classify services to avoid misreporting. TMWALA assists businesses by mapping transactions to the correct GST rate and SAC/HSN codes, reducing the risk of notices and audits.

HSN Code Classification For Diamonds And Jewellery

Accurate classification is essential for correct tax payment and ITC eligibility. The following are key classifications relevant to the industry:

• Rough or sawn diamonds: HSN 7102 – 0.25%
• Semi-precious and precious stones (excluding diamonds): HSN 7103 – 0.25%
• Synthetic or reconstructed stones and diamonds: HSN 7104 – 0.25%
• Jewellery articles made of precious metal: HSN 7113 – 3%

HSN code for diamond jewellery is 7113, which applies once diamonds are mounted or incorporated into jewellery articles.

Composite And Mixed Supply Under GST

The sale of diamond jewellery often involves both goods and services, bringing composite and mixed supply rules into play.

Composite Supply

When diamonds, precious stones, and making services are bundled together with jewellery as the principal supply, the entire transaction is taxed at 3%. This is the most common scenario for retail jewellery sales.

Mixed Supply

If diamond jewellery is sold along with unrelated goods, such as a luxury watch, as a single package, the transaction may be treated as a mixed supply. In such cases, the highest applicable GST rate among the items (for example, 18% on watches) will apply to the full value.

Treatment Of Making Charges

Under GST rules, making charges are not taxed separately when charged along with jewellery. Whether shown independently or included in the final price, the entire amount is taxed at 3% as diamond jewellery. This aligns with GST rules for jewellers and avoids artificial splitting of invoices.

GST On Old And Exchanged Diamond Jewellery

When a jeweller purchases old diamond jewellery from an individual consumer, no GST is applicable, as the transaction is not considered a supply in the course of business. Reverse charge does not apply in such cases.

However, if jewellery is purchased from a registered person and resold, GST applies on the sale value, with ITC available where eligible. For exchange transactions, GST is charged on the full value of the new jewellery, even if old jewellery is adjusted against the price.

Input Tax Credit On Diamonds

ITC is available on eligible goods and services used in the course of business, except those restricted under Section 17(5) of the CGST Act. The diamond industry historically faced significant ITC accumulation due to low output GST rates.

The rationalisation of GST on cut and polished diamonds to 1.5% aims to resolve this imbalance, improve liquidity, and reduce refund bottlenecks.

Conclusion

GST on diamonds in India continues to evolve as policymakers balance revenue objectives with industry realities. With differentiated rates for rough, cut, polished diamonds, and finished jewellery, compliance requires careful classification and accurate reporting. Recent GST Council decisions mark a positive step toward easing ITC challenges and supporting exports.

For jewellers, traders, and exporters, staying compliant is no longer optional; it is a strategic necessity. Leveraging expert-led platforms like TMWala can simplify GST management, reduce error risks, and help businesses focus on growth rather than compliance complexities.

FAQs

1. What is GST on diamonds in India?
   It depends on whether the diamond is rough, cut, polished, or set into jewellery.
2. What is the GST on rough diamonds?
   Rough diamonds are taxed at 0.25% GST.
3. What is GST on cut and polished diamonds?
   Cut and polished diamonds attract 1.5% GST.
4. What is GST on diamond jewellery?
   Diamond jewellery is taxed at 3% GST.
5. Are the charges taxed separately?
   No, making charges are included in the 3% GST on jewellery.
6. What is the HSN code for diamond jewellery?
   The HSN code is 7113.
7. What is GST on diamond job work?
   Diamond job work is taxed at 1.5% GST.
8. Is GST applicable to old diamond jewellery?
   No GST applies when bought from individual consumers.
9. What was the recent GST Council update on diamonds?
   IGST on certain small, imported diamonds has been reduced to Nil.
10. Can jewellers claim ITC on diamonds?
    Yes, ITC is available on eligible purchases.