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Published on:

November 29, 2024

Alankar Mishra

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Basics of GST

Precious Stones: 7103 HSN Code & GST Rate

Gems and jewellery trade crowns are the most difficult to break. Ready stones that are sometimes used to decorate overdress, and sometimes serve as self-investments, bear specific classifications and taxation rates according to the Goods and Services Tax (GST) framework in India. This guide examines the 7103 HSN Code, types of GST and their compliance, and taxation of these gems under Indian GST legislation.

What is HSN Code 7103?

The Harmonized System of Nomenclature (HSN) or HSN Code as it is commonly referred to is a common classification system that has been developed and is accepted in countries around the globe for taxation. Joining the GST movement, HSN Code 7103 stands exclusively for:

‍Precious Stones: This includes the following: rubies, sapphires and emeralds.

‍Semi-precious stones: Such as topaz, aquamarine, garnet and amethyst.

This includes stones which have been either worked on or those which have not.

The categorization makes sure that a uniform tax rate is applied to each item and that tax documents for foreign trade are made simpler.

GST Rate for Precious Stones (HSN Code 7103)

The GST rate applicable to precious and semi-precious stones is as follows:

1. Precious Stones (HSN 7103):

GST Rate: 3%

The same rate applies for all cut and uncut stones irrespective of the fact whether it’s sold separately or mounted into the jewellery.

2. Unworked or Rough Precious Stones:

GST Rate: 0% - Nil Rated.

The Indian government, however, has exempted GST on gems and jewellery only if they are in their natural form such as rough emeralds or uncut rubies.

GST Compliance for Precious Stones

1. Invoice Requirements

Businesses engaged in the sale of precious stones are required to provide the following when issuing GST-compliant tax invoices as well:

HSN Code 7103.

GST rate and value.

2. Input Tax Credit (ITC)

Those businesses that procure precious stones can avail of the Input Tax Credit (ITC) for the GST paid for further resale or use in the manufacturing of jewellery.

3. Reverse Charge Mechanism

About the reverse charge mechanism, in some scenarios, it would be the buyer to pay the GST if unregistered dealers sold the stones to registered businesses.

GST Rates for Precious Stones (HSN Code 7103)

Here is a detailed table summarizing the GST rates and classification of precious and semi-precious stones under HSN Code 7103:

Category	HSN Code	GST Rate (%)	Description
Polished Precious Stones	7103	3	Includes processed gemstones like cut and polished rubies, sapphires,and emeralds.
Unworked/Rough Precious Stones	7103	0 (Nil Rated)	Includes natural, uncut, or unworked precious stones like rough emeralds.
Polished Semi-Precious Stones	7103	3	Includes polished topaz, aquamarine, garnet, and amethyst.
Unworked Semi-Precious Stones	7103	0 (Nil Rated)	Includes raw or uncut semi-precious stones in natural form.

‍Importance of HSN Code 7103 in the Gems and Jewelry Industry

Trade Standardization: The use of HSN codes also standardizes processes concerning classification for tax purposes internationally and domestically as well, consequently reducing differences in the conduct of trade.

Facilitating ITC Claims: The HSN code sent out to the concerned authorities saves time by increasing the correct claim ratio and minimising tax payable amount.

Tax Transparency: HSN Code 7103 GST rates on advertisement have helped in clarification of tax rates bringing about adherence in the gems and jewellery industry.

Export and Import of Precious Stones

1. Export of Precious Stones

Polished or worked gemstones fall under the GST zero rate for exporters.

Businesses may file for a refund of input tax credit for GST paid on inputs for stone cutting and processing activity.

2. Import of Precious Stones

Imports of precious stones are liable to levy Basic Customs Duty (BCD) and also Integrated GST (IGST) at the rate of 3%. The importers can avail themselves of the ITC on the IGST that has been paid.

Challenges in Precious Stones GST Compliance

Valuation Problems: Assessing the taxable value of such unique stones is difficult because each stone is different in its quality and characteristics.

Information: Unsuitable documentation, for example, impairment, invoices or transportation can cause a problem in compliance or penalty.

Reverse Charge Mechanism: NI businesses have problems understanding RCM obligations when dealing with unregistered sellers.

Tips for GST Compliance in Precious Stones Trade

Maintain Duly Documentation: Have proper invoices, records of purchase, and transport documentation.

Do Not Differ From HSN Code 7103: Ensure that all transactions consisting of precious stones are appropriately designated under the 7103 HSN Code.

ITC Filing Should Be Done As Soon As Possible: In order to increase the cash flow, the ITC for the GST paid in respect of stone purchases should be claimed regularly.

Talk About Taxation To Professionals: Considering the complicated nature of taxation in the sector of gems & jewellery, professional help would make sure that compliance has no errors.

Conclusion

GST for precious stones HSN Code 7103 is determined according to their polished status or lack thereof. Polished stones/diamonds are taxed at 3%, while rough, uncut stones are taxed at 0%. Such a policy is designed to achieve a fair tax collection while at the same time encouraging the gems and jewellery industries. Rather, proper compliance, the correct use of HSN codes, and ITC claims are very important for business operators in this industry.

FAQs

1. What is the HSN Code for precious stones under GST?

The gemstone HSN code that applies for semi-precious and precious stones is 7103, it covers both the cut and polished stones as well as the rough stones.

‍2. What is the GST rate for precious stones under HSN Code 7103?

The 7103 HSN Code GST rate for polished precious stones is 3 per cent. Whereas, Unworked or rough stones do not attract Gst and are zero per cent.

3. What is the GST rate for HSN code 7103?

As for the GST rate applicable to HSN code 7103, polished Precious and Semi Precious stones attract the GST rate of 3%. On the other hand, rough stones do not have GST rules and zero per cent (0%) GST applies to such stones.

4. What is the HSN code for semi-precious stones under GST?

Semi-precious stones have their HSN code that is HSN code which is 7103 and are applied for both natural and synthetic type of semi-precious stones which can be cut, polished, or unworked.

5. How is GST applied on gemstones?

GST on gemstones is 3% for processed stones like cut and polished gemstones. For unworked or rough gemstones, the GST rate is nil (0%) to encourage raw material trade and processing.