The 57th GST Council meeting has recommended a series of measures to simplify tax administration, accelerate refunds and reduce compliance costs, with potential benefits for India’s gem and jewellery manufacturers, exporters, wholesalers and retailers.

The recommendations, announced on 8 October under the chairpersonship of Hon’ble Union Finance Minister Smt Nirmala Sitharaman, cover registration, tax returns, input tax credit (ITC), refunds and dispute resolution. Hon’ble Prime Minister Shri Narendra Modi welcomed the proposals, highlighting their focus on faster decisions, lower compliance costs, automated refunds and trust-based administration.

For the gem and jewellery industry, which manages substantial inventory values and working capital requirements, the proposed reforms could improve cash flow and reduce the time and resources businesses spend on tax compliance.

Kirit Bhansali, Chairman, GJEPC said:

“The GST Council’s recommendations are a positive step towards simplifying compliance and improving the ease of doing business. Faster refunds, greater clarity in tax procedures and reduced compliance costs can help India’s gem and jewellery exporters manage working capital more efficiently and strengthen their competitiveness in global markets.”

A key recommendation is the introduction of system-based processing of eligible GST refunds. Under the proposed first phase, 90% of eligible refund claims relating to zero-rated supplies and inverted duty structures would be sanctioned provisionally through automated, risk-based processing, without officer intervention. The proposed timeline for issuing an acknowledgement or deficiency memo would also be reduced from 15 days to 10 days.

The Council has also recommended allowing refunds of accumulated ITC on capital goods for zero-rated supplies and on input services and capital goods for inverted duty structures, subject to specified conditions and timelines. These changes could help eligible exporters unlock funds tied up in the tax system and manage expenditure on precious metals, gemstones, manufacturing and export operations more efficiently.

The recommendations also address GST treatment for certain transactions involving overseas buyers, Special Economic Zones (SEZs) and Free Trade Warehousing Zones (FTWZs). Greater clarity on qualifying transactions could benefit businesses using these facilities for warehousing, processing and export-related activities.

On enforcement, the Council has recommended removing arrest provisions under GST, raising the prosecution threshold from Rs 1 crore to Rs 5 crore and reducing the maximum general penalty under Section 125 of the CGST Act from Rs 25,000 to Rs 10,000. It has also proposed an upper limit of Rs 40 crore on pre-deposits for certain appeals involving only penalties and no tax demand. These measures aim to reduce the financial and procedural burden on taxpayers while retaining provisions to address fraud and evasion.

Smaller businesses could also benefit from proposed improvements to GST registration, return filing and ITC reconciliation. The Council has recommended measures to reduce mismatches between tax returns and credit claims, potentially lowering the number of system-generated notices. It has also approved in principle an optional quarterly payment scheme for businesses with turnover of up to Rs 5 crore that deal exclusively in business-to-consumer supplies.

For India’s gem and jewellery MSMEs, including smaller manufacturers and retailers, simpler registration and return procedures could reduce the administrative burden of running a business and allow greater focus on production, sales and market expansion. The recommendations form part of the government’s wider effort to simplify GST administration.