For Surat’s 40-year-old Paresh Kanani, life has changed dramatically over the past year. His small-time diamond trade, which used third-party channels to export small quantities of jewellery to clients abroad, now harbours ambitions of becoming a ₹100-crore company from the ₹8 crore it now is. Kanani and many like him in the diamond hub of Surat attribute their happiness to the new tax regime, the Goods and Services Tax (GST), which, they say, has given wings to their dreams.

From being an unorganised player in the ₹1-lakh crore diamond industry, to a registered exporter with a GST number now, the SSC-pass Kanani is today happy and satisfied at being able to do business without having to rely on a third party.

Unorganised small and medium enterprises usually do not have tax registrations of their companies. Their business is mostly through third-party exporters and importers. The tax liability normally rests on the third-party player, who in exchange, charges a commission of 2-2.5 per cent from the unorganised players, who are spared the hassles of documentation.

“For the past one year, I have been able to do direct business with my clients without relying on a third party for payment or delivery. For a small exporter, this boosts the self-respect and confidence of doing business. I am confident that I will achieve a ₹100-crore turnover in two years,” says Kanani, who registered his company under the name ‘Trinity Jewels’ after the GST rollout. The GST system mandated that he formalise the structure of his business.

“There was initial hesitation due to unfamiliarity with the GST system. We attended many awareness seminars before the rollout, but eventually, the ground situation was completely different. But now it is the more preferred mode, even by SMEs,” said Kalpesh Vaghasiya of Elvee Jewels Pvt Ltd.

According to an industry estimate, about 300-350 such entrepreneurs like Kanani formed new companies and turned to official channels to do the business.

Credibility boost

“We are witnessing a big transformation in the diamond industry, which has been dominated by unorganised players. Post-GST, we have seen young entrepreneurs setting up new companies. This gives credibility to the sector and to the individual players, who will derive financial advantage by coming under the formal system,” said Dinesh Navadiya, Gujarat chairman of the Gems and Jewellery Export Promotion Council (GJEPC).

Underlining the multiple advantages of using an official system, Navadiya said, “They save a lot on the commissions they earlier paid to the third party. From those savings, they can appoint an accountant to take care of their accounts; more importantly, all the transactions reflected in their books creates a track record and gives them financial credibility,” added Navadia.