Government to save gold from smugglers
The government is unlikely to increase the duty on imported gold further as its own assessment shows that it will result in smuggling of the precious metal into the country.
A senior finance ministry official said the increase will help check a surge in imports, while the hike in duty on diamonds was aimed at checking round-tripping. This is the second increase in customs duty in a span of two months and the official said the first hike had resulted in a decrease in imports during February. “We want it to fall further,” said the official pointing out that the spurt in imports to around $40 billion during the first eight months was putting pressure on the current account deficit and the overall economic health. Imports rose 50% during the first nine months.
In terms of revenue, the increase announced in the Budget will help the government earn more than Rs 5,800 crore. Gold was one of the primary drivers of the current account deficit for the government. There was a growth of almost 50% in imports of gold and other precious metals in the first three quarters of this year.
The increase in the basic customs duty on standard gold bars; gold coins (purity exceeding 99.5%) and platinum is from 2% to 4% and on non-standard gold is from 5% to 10%. In sync with these, the basic duty on gold ore, concentrate and dore bars for refining is being enhanced from 1% to 2%. On the excise side, duty on refined gold is being increased in the same proportion from 1.5% to 3%.
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