Petra implements the 2.04% levy on Indian buyer

                            Ensure that these additional charges are factored                              into your future business- and cashflow planning!

FM India should peep-up the opaque of EL announcement!

Recently Petra Diamonds had issued a Memorandum to all their rough buyers yet it had an exclusive focus on buyer’s from India. Jacques Breytenbach, CFO –Petra diamond said, “Petra Diamonds has taken the stance to implement the 2.04% levy with immediate effect and this additional levy will be raised on all relevant sales transaction invoiced to Indian customers from the date of this letter. Petra issued the letter on April 26, 2021. 

The letter said, as announced previously by the Indian Minister of Finance in the Union Budget of India speech on the 1st February 2020 (amended on 23 March 2020), a new equalization levy (Referred to as “EL”) has been implemented effective from April 1, 2020. This levy will apply to all overseas e-commerce transactions for Indian tax residents or for goods, which are exported to an Indian address/company. 

Unfortunately, notwithstanding the time which has passed since the effective date, the impact of the EL on transactions between Petra Diamonds Group Companies and Petra’s valued Indian clients is not yet fully understood and we are still in the process of seeking more clarity around the application of the EL for sales through Petra’s Online Bidding Platform. 

This uncertainty was further fuelled by media reports quoting the Indian Minister of Finance that the EL was not applicable to the B2B sale of rough diamonds via online platforms; however, we remain unaware of any relevant formal guidelines to that effect from the Indian authorities. 

Petra Diamonds has taken the stance to implement the 2.04% levy with immediate effect and this additional levy will be raised on all relevant sales transaction invoiced to Indian customers from the date of this letter. Those customers registered in India who request Petra Diamonds (or any nominated subsidiary) to invoice and export their parcels to an Indian address / company should be aware that an additional 2.04% will be levied and the amount will be added to the final sales invoice (in addition to the final sales price).

Please give due consideration to your bidding / invoicing processes. Petra will keep the amounts so recovered separate in Escrow until it’s clear that these levies should be paid over to the Indian Government. If, however, it is established that these levies are not payable to the Indian Government, all these levies will be refunded to the relevant customers.