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Indian Officials Suspect Tax Evasion, Seize Couriered Diamond Parcels

Indian Goods & Services Tax (GST) authorities have conducted a series of raids on angadias, the courier firms that have traditionally transported rough and polished diamonds between cutting centres and sales offices.

The crackdown has involved over 200 angadia firms, with the authorities suspecting tax evasion by diamond processing firms in Surat, Mumbai, Ahmedabad and Bhavnagar.

In one official swoop, parcels with diamonds estimated at ₹1,000 crore ($158 million) were seized at Mumbai Central station from angadias who had just got off a train from Surat. Authorities think the parcels might involve tax evasion worth ₹300 crore ($47 million).

Angadias have now stopped accepting parcels from any firm that does not have a full GST registration. There are several layers in the taxation issue here. Angadia services attract an 18 percent GST rate, while polished diamonds are pegged at 3 percent GST. Apart from the angadias showing evidence of having charged 18 percent GST on their services, the authorities want evidence of the diamond firms having paid their 3 percent GST as well.

The GST on the angadia services has to be computed on a couple of options when the courier service is hired. The diamond firm can either insure the goods with the angadia or if the goods are otherwise insured, pay a flat fee on the value of the goods — the usual is ₹70 for every ₹100,000 in value.

Dinesh Navadiya, the regional head of the Gem & Jewellery Export Promotion Council (GJEPC) in Surat, has made a representation to the authorities, saying the parcels of those firms that are fully GST-compliant should be released.

One industry source told media that most of the parcels seized in Mumbai were without invoices and did not have GST registration.

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