Rising Gold Prices Hit Demand, GJC Pushes for GST Cut to Revive Jewellery Market

Surat | Gujarat — As gold and silver prices continue to surge to historic highs, India’s domestic jewellery market is showing clear signs of stress, particularly among middle-class and rural buyers. Against this backdrop, the All India Gem & Jewellery Domestic Council (GJC) has urged the Central Government to reduce GST on gold and silver jewellery from the current 3% to 1.25% in order to revive demand and ease financial pressure on consumers and jewellers alike.

In its detailed pre-Budget submission to Union Finance Minister Nirmala Sitharaman for the Union Budget 2026–27, GJC warned that while gold prices have risen sharply due to global factors, the absolute tax burden on jewellery purchases has multiplied, making traditional gold buying increasingly unaffordable.

“The sharp rise in gold prices has multiplied the absolute GST burden on consumers and created severe working capital stress for jewellers,” said Rajesh Rokde, Chairman, GJC.

“Our request is not for concessions, but for restoring proportionality and fairness. A modest GST reduction will help revive middle-class and rural demand and protect millions of livelihoods dependent on this sector.”

The council has proposed either a reduction of GST to 1.25% or a uniform 1.5% rate across the sector on a revenue-neutral basis. According to GJC, this move would counter inflation-driven tax pressure and help bring back volumes that have shifted to distress selling or informal channels.

Beyond GST reduction, the council highlighted that jewellers are facing severe liquidity challenges due to blocked input tax credit (ITC) on services such as rent, logistics and security, which attract 18% GST. GJC has sought either a refund of accumulated ITC or a reduction of GST on these input services to 5%.

The submission also called for clarity on 5% GST on jewellery job-work, relief from income tax on unrealised inventory gains caused by gold price appreciation, and exemption from capital gains tax when old hallmarked jewellery is exchanged and reinvested.

Avinash Gupta, Vice Chairman, GJC, stressed the need for reforms that align affordability with formalisation.“If we want transparency and digital transformation, jewellery must remain accessible. Measures like EMI for hallmarked jewellery, rationalised credit card MDR and tourist GST refunds will bring younger and global consumers into the organised market.”