In a set of frequently asked questions (FAQs) issued on the amendments, the department said the Bill proposes to introduce a new exemption for foreign mining companies on income earned from the sale of rough diamonds.
The provision will be inserted as Serial No. 13F in Schedule IV of the Income-tax Act, 2025.
The proposed exemption will not be limited to mining companies.
According to the FAQs, foreign companies functioning as sightholders, brokers, aggregators, and tender or auction entities in the rough diamond business will also be eligible.
To claim the exemption, the sale of rough diamonds must take place in a Special Notified Zone (SNZ) referred to under the Income-tax Act. At present, such zones operate in Mumbai and Surat. Eligible companies must also maintain and furnish information in the prescribed manner.
The FAQs define “rough diamonds” as unworked or simply sawn, cleaved or bruted diamonds falling under specified Customs Tariff headings and accompanied by a Kimberley Process Certificate.
The proposed tax exemption will be available for 15 years, up to the tax year ending March 31, 2041.Industry experts said the move could strengthen India’s role in the global diamond trade.
Colin Shah, Managing Director of Kama Jewelry, said the exemption addresses a long-standing tax hurdle that had limited direct rough diamond trading in India despite the country’s dominance in diamond processing.
He said allowing global mining companies to sell rough diamonds in Special Notified Zones could reduce procurement timelines by 15-20 days, lower intermediary costs and improve India’s competitiveness in international markets.
According to Shah, the measure has the potential to increase polished diamond exports by an additional $3-5 billion over the long term, although these are industry estimates.
According to Himanshu Parekh, Partner and National Head, Tax–TMT at KPMG in India, the 15-year tax holiday for foreign companies selling rough diamonds, along with similar incentives for electronics manufacturing and data centres, is intended to position India as a preferred hub for diamond trading and attract long-term investment.
