Duty reliefs, tariff tweaks, quicker refunds, and clearer rulings aim to cut costs and improve ease of doing business. Here is a quick snapshot of what matters most for the trade, as the GST Council’s 56th meeting and Union Budget 2026 reset GST and Customs rules for gems and jewellery.
The recent reforms introduced by the GST Council in India, in its 56th meeting, were in some ways a comprehensive reorganisation and reimagination of GST. The changes affected all sectors and more so, the Gems and Jewellery sector. Many of these changes were reiterated in the Budget and Finance Bill, 2026. The Budget 2026 has introduced major reforms on the Customs and Customs tariff front with a view to enhance manufacturing competitiveness of India. The Customs regulations can be grouped in major heads as follows:
- Changes to the Customs Act provisions
- Changes to Customs tariffs
- Introduction of new Customs tariffs
- Sunset Clauses in open-ended notifications of Customs
We would like to mention that some of the amendments proposed by the Finance Bill shall be operational from such dates as may be notified. Suitable notifications and circulars to give effect to the Budget announcements may not have been in force and will necessitate revalidation by tax experts. In this article, we capture some amendments of the Budget which are relevant for the sector
Comprehensive Review of Customs Exemptions
A comprehensive review has been undertaken in respect of 124 conditional exemptions/concessional duty rate entries in notification No. 45/2025-Customs dated 24.10.2025 whose validity is expiring on 31.03.2026. After review, the following entries (relevant for G&J sector) are being continued, with or without modification, for two years, i.e. up to 31.03.2028:
- Simply sawn diamonds
- Seeds for use in manufacturing of rough lab-grown diamonds
- Gold ores and concentrates for use in the manufacture of gold
Further, a sunset date of 31.03.2027 is being prescribed for gold dore bars and silver dore bars with precious metal content below 95% and also for select gold and silver imports by eligible passengers.
Extension of Customs Duty Exemptions for Specified Inputs and Processes
The Budget has also extended the validity of several long-standing Basic Customs Duty (BCD) exemptions, offering continuity to niche segments within the gems and jewellery value chain. Notably, the validity of exemptions under the following notifications has been extended by two years, up to 31 March 2028:
- Exemption for precious stones imported by post on approval or return basis
- Exemption for goods imported for execution of export orders under jobbing arrangements
- Exemption for copper cathodes, wire bars, and wire rods produced from copper reverts
- Exemption for gold and silver produced from copper anode slime exported out of India for toll smelting and processing
These extensions provide operational certainty and help mitigate cost pressures for exporters operating under specialised manufacturing and processing models.
Customs Duty Exemption on Lab-Grown Diamond (LGD) Seeds
In a significant relief for the fast-growing lab-grown diamond segment, the Budget continues the customs duty exemption on imports of LGD seeds, with the exemption now available up to 31 March 2026.
Reduction in duty of goods imported for personal use from 20% to 10%
The said rate change will be effective from 1st April 2026 and is likely to boost jewellery sales which are often imported for personal use.
Operationalisation of mechanism to combat conflicting and divergent views taken in advance rulings by tax authorities
Section 101B of the CGST Act provides that appeals against conflicting advance rulings passed by the State appellate authorities would be heard by the National Appellate Authority for Advance Rulings (NAAAR). However, this authority is not yet constituted. Thus, there is a gap on the legal front on certain vexed issues and no mechanism for aggrieved taxpayers to obtain quick relief.
To address this gap, the Finance Bill 2026 has proposed, effective 1st April 2026, that the Central Government would be empowered to designate one of the existing tax administration authorities, including a tribunal, to hear appeals filed under Section 101B of the CGST Act, 2017. Further, some procedural flexibility and relaxations are provided which would enable such authority as empowered to administer these cases.
Refund Related Amendments
The Finance Bill 2026 proposes that the benefit of provisional refund to the extent of 90% of the amount claimed should also be extended to applications made under the inverted duty mechanism. Suitable notification is awaited on this aspect.
Greater Clarity on Treatment of Post Sales Discount
As per the current provisions, for certain post sales discounts to be excluded from the value of a taxable supply, there is a need for an agreement in place which establishes that a discount is entitled. Now this requirement is done away with. So long as the input tax credit in respect of discount is done by the recipient, the same shall be permitted as reduction in value of supply.
Disclaimer
This article has been prepared based on information available in the public domain and the Finance Bill. Readers are advised to consult the official legislation or seek professional advice before taking any decision or action. Views expressed are personal.