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Published on:

April 6, 2026

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GST on Diamond Jewellery: Rates and Compliance

Introduction

Diamond jewellery is one of the most valuable segments of India’s jewellery market. It is purchased for weddings, gifting & long-term value. Because the transaction amounts are usually high, the correct GST rate becomes important. Under the Goods and Services Tax system, the rate depends on the stage of the diamond. Rough stones, polished loose stones & finished jewellery are not taxed the same way. The current structure has been in place since July 2022, after changes recommended by the GST Council.

GST on Rough, Polished & Finished Diamonds

The first distinction in GST law is the form of the diamond.

Rough or unworked diamonds attract GST at 0.25%. These stones are natural & not yet cut or polished. They fall under HSN 7102. This concessional rate supports India's diamond processing industry.

Once a diamond is cut and polished and sold as a loose stone then the tax rate changes. Earlier, polished diamonds were also taxed at 0.25%. This led to an input tax credit imbalance in the supply chain. To address this issue then the rate was increased to 1.5% from 18 July 2022. The classification remains under HSN 7102. The 1.5% rate is still applicable.

When diamonds are set into gold, platinum or other precious metals and sold as ornaments then they are treated as diamond jewellery. GST is charged at 3% under HSN 7113 in this case. The tax is applied to the full transaction value.

How Making Charges Are Treated

Making charges often creates confusion for buyers. In most cases, jewellers show diamond value, gold value & making charges separately in the bill. For GST purposes, though, all these components form part of a single supply of jewellery. So the 3% GST rate applies to the total invoice value. It includes making charges. Only if pure labour service is provided without the sale of jewellery would a different service rate apply. In standard retail sales, the entire amount is taxed at 3%.

Job Work in the Diamond Sector

The diamond industry relies heavily on job work. Small units cut & polish stones for larger traders. When cutting and polishing services are provided to a registered person then GST is charged at 1.5%. This reduced rate was introduced to ease tax credit flow within the industry. If services are provided to an unregistered person then general service tax rules apply.

Import and Export Treatment

GST applies to imports in the same way as domestic supply. At the time of import:

Rough diamonds are taxed at 0.25%.
Cut and polished diamonds are taxed at 1.5%.
Finished diamond jewellery is taxed at 3%.

Basic Customs Duty is charged separately & is not part of GST. Exports, on the other hand, are treated as a zero-rated supply. No GST is charged on export invoices. Exporters can claim a refund of input tax credit or supply under a Letter of Undertaking without paying IGST. This framework supports India's strong diamond export sector.

Input Tax Credit (ITC) Rules

Registered businesses can claim Input Tax Credit on GST paid for purchases used in business. In the diamond trade, ITC can be claimed on:

Purchase of rough or polished diamonds
Purchase of gold or other metals
Job work services
GST paid at import

A valid invoice is required. The supplier must have reported the supply in returns. Returns must also be filed properly by the buyer. Consumers purchasing jewellery for personal use cannot claim ITC.

Compliance Requirements for Jewellers

Jewellers must register under GST if turnover exceeds the prescribed threshold. After registration, they must issue proper tax invoices, collect GST at the correct rate & file periodic returns such as GSTR-1 and GSTR-3B. Invoices must clearly mention:

Seller GSTIN
HSN code
Taxable value
GST rate and amount
Total invoice value

Because jewellery transactions involve large values, accurate classification is important. Errors in HSN coding can lead to notices and penalties.

Exchange of Old Jewellery

In exchange transactions, GST is charged on the value of the new jewellery supplied. The old jewellery received from the customer is treated as a separate inward transaction for the jeweller. Proper accounting entries are required to record both sides correctly.

Applicable GST Rates on Diamonds

Category	HSN Code	GST Rate	Notes
Rough / Unworked Diamonds	7102	0.25%	Natural stones, not cut or polished
Cut & Polished Loose Diamonds	7102	1.50%	Applicable from 18 July 2022
Diamond Jewellery (with metal setting)	7113	3%	Applies on total value including making charges
Cutting & Polishing Job Work (B2B)	–	1.50%	When supplied to registered persons
Exports (Diamond/Jewellery)	–	0%	Zero-rated supply under GST

Also Read: GST on Export of Services: Rules, Rates, and Compliance

Current GST Rate Summary

As of early 2026, the applicable GST rates are:

Rough diamonds – 0.25%
Cut and polished diamonds – 1.5%
Diamond jewellery – 3%
Cutting and polishing job work (to registered persons) – 1.5%
Exports – Zero-rated

Conclusion

GST on diamond jewellery depends on the stage of the diamond. Rough stones are taxed at 0.25%. Loose polished diamonds are taxed at 1.5%. Finished diamond jewellery is taxed at 3%. Making charges form part of the taxable value. Job work for cutting and polishing is taxed at 1.5% when supplied to registered persons. Exports remain zero-rated. Correct classification & proper invoicing ensure compliance.

FAQs

Q1. What's the GST rate on diamond jewellery in 2026?

Diamond jewellery is taxed at 3%. The rate applies to the total invoice value. It includes the value of diamonds, metal & making charges.

Q2. How much GST is charged on loose polished diamonds?

Cut and polished loose diamonds attract GST at 1.5%. This rate has been applicable since July 2022.

Q3. Is GST applicable to making charges separately?

No. When jewellery is sold, making charges are treated as part of the overall supply. GST at 3% is applied on the combined value.

Q4. Are exports of diamond jewellery subject to GST?

Exports are treated as zero-rated under GST. That means no tax is charged on export invoices. Businesses can also claim a refund of the input tax credit they've accumulated.

Also Read: GST on Education Fees: Rates and Exemptions

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