The All India Gem & Jewellery Domestic Council (GJC) has submitted comprehensive pre-Budget recommendations to Finance Minister Nirmala Sitharaman ahead of Union Budget 2026-27. The submission, made this week, outlines strategic tax and policy measures designed to ease cost pressures, improve compliance, and support small and medium jewellers in the domestic market.

GJC, representing India's domestic gems and jewellery trade, stated that the proposals address structural issues intensified by sharp gold price increases over the past year. According to the council, higher gold prices have increased the effective tax burden on consumers and tied up working capital for jewellers, even without changes in existing tax rates.

Key GST Rationalisation Proposals

The council's budget recommendations centre around five broad areas, with GST rationalisation forming the cornerstone of their demands. The following table outlines the primary GST-related proposals:

GJC's primary demand involves reducing GST on gold and silver jewellery from the current 3.00% to either 1.25% or a uniform 1.50% across the sector. The council believes this reduction would help offset inflation-led pressures and revive demand in middle-income and rural markets.

Tax Relief and Compliance Measures

The council has proposed several additional tax relief mechanisms to address current market challenges. These include a refund mechanism for accumulated input tax credit on services, or alternatively, a reduction in GST on services such as rent, security and logistics, which currently attract an 18.00% levy. According to GJC, this has resulted in an inverted duty structure for many jewellers.

Other significant proposals include:

• 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
• Formal clarification on the 5.00% GST rate applicable to jewellery job-work services

GJC Chairman Rajesh Rokde emphasised that "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 and MSME Support Initiatives

Beyond tax reforms, GJC has called for immediate implementation of the Tourist GST Refund Scheme at major airports to boost jewellery purchases by foreign visitors. The council has also outlined several measures to support MSME jewellers and promote digital adoption:

GJC Vice Chairman Avinash Gupta noted that these steps would support formalisation, digital adoption and consumer trust across the sector. The council believes these measures will strengthen the sector's contribution to the economy while addressing current operational challenges.

Industry Outlook and Government Collaboration

The comprehensive recommendations reflect the jewellery industry's focus on addressing structural challenges while promoting growth and formalisation. The council has emphasised its commitment to working collaboratively with the government to implement these measures effectively. The proposals aim to balance revenue considerations with industry sustainability, particularly given the impact of rising gold prices on market dynamics and consumer behaviour patterns.

The upcoming Union Budget, scheduled for presentation on February 1, 2026, is expected to incorporate a nominal GDP growth assumption ranging between 10.00% and 10.50% for the fiscal year 2027, according to findings from a Business Standard poll of economists.

Economic Growth Projections

The projected nominal GDP growth range represents a key economic parameter that will underpin the government's fiscal planning for FY27. This assumption serves as the foundation for calculating revenue projections, expenditure allocations, and overall budgetary framework.

Budget Planning Framework

The nominal GDP growth assumption plays a critical role in shaping the Union Budget's overall structure. Government revenue estimates, including tax collections and non-tax revenues, are typically calculated based on these growth projections. Similarly, expenditure planning across various ministries and sectors relies on these economic forecasts.

The economist poll findings suggest a consensus among market experts regarding India's economic trajectory for FY27. This growth range will influence policy decisions and resource allocation strategies that the government will outline in the upcoming budget presentation.

Fiscal Implications

The projected growth range between 10.00% and 10.50% will determine the government's approach to fiscal deficit management and debt sustainability measures. These assumptions directly impact the calculation of fiscal ratios and compliance with fiscal responsibility targets established under various economic frameworks.