Union Budget 2026: GST Rationalisation, MSME Relief Top Jewellers’ Demands

Ahead of the Union Budget 2026–27, the All India Gem & Jewellery Domestic Council (GJC) has submitted a comprehensive set of pre-Budget recommendations to Finance Minister Nirmala Sitharaman, seeking tax rationalisation, MSME relief, and measures to accelerate formalisation in the domestic jewellery market.

The proposals aim to ease cost pressures on jewellers, improve compliance, and address structural challenges that have intensified amid a sharp rise in gold prices over the past year.

GJC Submits Pre-Budget 2026 Recommendations to Centre

The submission, sent this week, outlines policy and tax interventions focused on small and medium jewellers operating in India’s domestic market.

Impact of Rising Gold Prices on Jewellers

According to GJC, the steep increase in gold prices has:

• Increased the effective tax burden on consumers

• Locked up working capital for jewellers

• Intensified stress on margins without any change in tax rates

The council said these structural issues need to be addressed in the Union Budget 2026 to sustain demand and protect livelihoods across the jewellery value chain.

GST Rationalisation and Tax Relief Proposals

GJC’s Budget 2026 recommendations are built around five broad focus areas, including GST rationalisation, direct tax relief, formalisation, MSME support, and faster implementation of existing schemes.

Demand to Reduce GST on Gold and Silver Jewellery

Proposed GST Rate Cut

One of the key demands is a reduction in GST on gold and silver jewellery from the current 3% to either:

• 1.25%, or

• A uniform 1.5% across the sector

GJC said this would help offset inflation-led pressures and revive demand, particularly in middle-income and rural markets.

Input Tax Credit and Service GST Relief

The council has also sought:

• A refund mechanism for accumulated input tax credit (ITC) on services, or

• A reduction in GST on services such as rent, security, and logistics, which currently attract an 18% GST

According to GJC, the existing structure has resulted in an inverted duty structure for many jewellers.

Job-Work GST Clarification and Inventory Tax Relief

Other key proposals include:

• A formal clarification on the 5% GST rate applicable to jewellery job-work services

• A one-year deferral of income tax on unrealised inventory gains arising from gold price appreciation in FY26

• Capital gains tax exemption when hallmarked jewellery is exchanged and reinvested

GJC Chairman’s Statement

GJC Chairman Rajesh Rokde said:

“a modest GST reduction, together with relief on notional inventory gains and job-work clarity, will bring millions of transactions back into the formal economy, protect karigar livelihoods, and make jewellery once again an accessible savings asset for Indian households."

Tourism, MSMEs and Digital Push in Budget 2026

Beyond taxation, GJC has also proposed several measures to boost consumption, formalisation, and digital adoption.

Tourist GST Refund Scheme

The council has urged the government to immediately roll out the Tourist GST Refund Scheme at major airports to encourage jewellery purchases by foreign tourists.

MSME Relief and Compliance Simplification

Additional recommendations include:

• Simplified compliance norms for MSME jewellers

• Lower merchant discount rate (MDR) on credit card transactions

• Enabling formal EMI options for hallmarked 22-karat jewellery

Digital Gold Regulation and Consumer Trust

GJC has also called for:

• Clear regulation of digital gold

• Measures to strengthen consumer trust and transparency in digital transactions

Vice Chairman’s Statement

GJC Vice Chairman Avinash Gupta stated that these steps would support:

• Formalisation of the jewellery trade

• Greater digital adoption

• Improved consumer confidence

Industry Ready to Work with Government

The council said it remains open to working closely with the government to implement these measures and strengthen the gem and jewellery sector’s overall contribution to India’s economy, employment generation, and export potential.