Gold and platinum will be costlier as the government has proposed doubling the import duty on these precious metals.
“I propose to increase basic customs duty on standard gold bars; gold coins of purity exceeding 99.5 per cent and platinum from 2 per cent to 4 per cent and on non-standard gold from 5 per cent to 10 per cent,” Finance Mukherjee said in his Budget speech.
Industry experts are of opinion that this could lead to an increase of 3-4 per cent in the prices of gold.
“The gold will get costlier by 3-4 per cent as jewellers will pass on customs duty and excise duty on to the consumers,” Gems and Jewellery Export Promotion Council Chairman Sanjay Kothari said.
The basic duty on gold ore,concentrate and dore bars for refining has also been double to 2 per cent.
The excise duty on refined gold has been increased from 1.5 per cent to 3 per cent.
To prevent round-tripping,it is proposed to impose basic customs duty of 2 per cent on cut and polished,coloured gem stones at par with diamonds.
“One of the primary drivers of the current account deficit has been the growth of almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results,” Mukherjee said while announcing these proposals. The government also proposed to bring unbranded precious metal jewellery under the ambit of excise duty of one per cent but excluded branded silver jewellery from excise duty.
To minimise the impact on small artisans and goldsmiths,the Finance Minister has taken various steps,such as the excise duty would be charged on tariff value equal to 30 per cent of the transaction value.
Bombay Bullion Association President Prithviraj Kothari said,”I totally oppose the move. The doubling of customs duty will give way for illegal channel to operate and reduce gold demand significantly by 30-40 per cent.”
In 2011,1,037 tonne of gold was available in the domestic market,of which 967 tonne was imported and the rest was from other sources like recycled,according to the World Gold Council data.