GST on Diamonds: Recommendation to Reduce the Rate from 5% to 0.25% on 18 January 2018
At its meeting on 18 January 2018, the GST Council recommended reducing the GST rate from 5% to 0.25% for diamonds identified under tariff heading 7102. The recommendation formed part of a wider package of proposed GST rate changes.
Goods covered by the original recommendation
The original 18 January 2018 article recorded the following item. The historical description is reproduced to preserve the original information; tariff heading 7102 specifically concerns diamonds, while other precious stones may fall under different headings.
| S. No. | HSN / tariff heading | Description in the 2018 article | Rate referred to in recommendation |
|---|---|---|---|
| 1 | 7102 | Diamonds and precious stones | 5% to 0.25% (proposed) |
When does a GST Council recommendation become law?
Under Article 279A of the Constitution of India, the GST Council makes recommendations on GST matters, including rates. A Council recommendation does not, by itself, amend the tax rate applicable to a supply. Legal effect ordinarily follows through a duly issued and effective rate notification under the applicable GST law.
Section 9(1) of the Central Goods and Services Tax Act, 2017 (CGST Act) provides for levy of central GST on intra-State taxable supplies at notified rates, on the recommendations of the Council, subject to statutory limits. The corresponding State or Union Territory GST provisions govern the other domestic component. Section 5(1) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) provides for the levy of integrated GST on inter-State taxable supplies, at notified rates.
Accordingly, the announcement on 18 January 2018 should be read alongside the relevant notifications and their commencement dates. The original article also correctly cautioned that publication of a Gazette notification was necessary to give the proposed reduction legal effect; a circular alone does not ordinarily change a statutory rate.
Meaning of HSN 7102 and classification of diamonds
HSN means the Harmonised System of Nomenclature, a classification system used in the customs tariff and GST rate schedules. Heading 7102 covers diamonds, whether or not worked, but not mounted or set. Specific subheadings distinguish different kinds of diamonds, including industrial and non-industrial diamonds and their degree of processing.
Not all items described in ordinary language as precious stones fall under heading 7102. The applicable rate must be checked against the exact HSN subheading, product description and any relevant conditions or exemptions in the rate notification. Jewellery, mounted diamonds and other gemstones may be classified differently.
How to verify the applicable GST rate
For a present-day transaction, determine the HSN classification and the date and nature of supply, then consult the consolidated rate notifications and later amendments. GST rates and schedules have changed since January 2018, including changes made after subsequent GST Council meetings. Do not use the historical 0.25% figure without verifying that it applies to the particular goods and transaction.
- GST Council - meeting decisions, recommendations and official publications.
- CBIC Tax Information Portal - GST notifications, amendments and circulars.
- CBIC GST portal - GST legislation and related official resources.
- India Code - texts of the CGST Act, IGST Act and other central laws.
- GST portal - official GST taxpayer services and information.
Frequently asked questions
Did the GST Council recommend 0.25% GST on 18 January 2018?
Yes. The historical article records a recommendation to reduce the rate from 5% to 0.25% for an entry identified as HSN 7102. The exact scope and legal commencement must be established from the relevant notification.
Is the 0.25% rate applicable to every precious stone?
No such conclusion follows from the historical entry. Heading 7102 concerns diamonds. Other precious stones, mounted items and jewellery require separate classification and rate verification.
Which legal provisions govern GST rate notifications?
Section 9(1) of the CGST Act governs the central tax component on intra-State supplies; Section 5(1) of the IGST Act governs integrated tax on inter-State supplies. Article 279A establishes the GST Council and its recommendation-making role.
Note: This article is for general information and historical research. For a transaction, refer to the operative notification and seek professional advice where classification is uncertain.