The government announced yet another increase in the import duty on gold to a record 10 per cent and a hike in the excise duty on the yellow metal,in continuing efforts to choke demand for gold and help rein in the current account deficit.
Import duty on refined gold bars will now be 10 per cent compared to 8 per cent earlier,the third hike in the last eight months,while excise duty on gold bars will be 9 per cent against 7 per cent earlier. The government also raised on Tuesday the import duty on silver and platinum to 10 per cent,up from 6 per cent and 8 per cent respectively,revenue secretary Sumit Bose said.
With todays decision,while the government hopes to generate an additional revenue of Rs 4,830 crore,the price of gold is expected to go up as much as Rs 600 per 10 grams,according to bullion traders. It is expected that the move will bring down the import of the yellow metal,which rose from 205 metric tonnes in the April-July 2012-13 period to 383 metric tonnes during the same period in the current fiscal,registering 87 per cent jump. Consequential adjustments in customs duties are being made on gold ore/concentrate,gold dore bar and silver dore bar. Thus,additional duty of customs (CVD) on gold dore bars and on gold ore/concentrate is being increased from 6 per cent to 8 per cent and on silver dore bar from 3 per cent to 7 per cent, Bose said.
Excise duty on silver it was hiked from 4 per cent to 8 per cent. Notifications regarding the duty hikes were laid in Parliament today.
Finance minister P Chidambaram had on Monday announced that steps would be taken to compress the demand of precious metals,oil and non-essential goods to contain CAD at $70 billion or 3.7 per cent of GDP in 2013-14. The CAD was $88.2 billion,4.8 per cent of GDP,last fiscal. High CAD has hurt the rupee badly,making it the worst performing currency in Asia. The rupee had slipped to 61.80 to a dollar earlier in the month. Rupee closed at 61.19 a dollar on Tuesday.
Bullion traders said that though the move will help in reducing CAD by lowering demand for gold,a spurt in smuggling will follow. The only fear is that this may make gold smuggling attractive again. Silver duty too has gone up but the absolute numbers are relatively small, Jayant Manglik,president retail distribution,Religare Securities Limited,said.
All the same,even though the duty hike coupled with rupee depreciation will make gold costlier,investors are likely to invest more in jewellery than bars with festive season around the corner,Reena Rohit,chief manager currencies and commodities,Angel Broking,said. In the long run,the dampening effect on domestic bullion market would be visible,she added.
India imported 845 metric tonnes gold in 2012-13,valued at Rs 2,45,862 crore while the import of silver during the period was 1,963 metric tonnes valued at Rs 10,691 crore.
Worried over the yawning deficit in current account due to high import of gold and oil and falling exports,the government had raised import duty on standard gold to 8 per cent in June with a view to curb demand.
Gold jumps R565 in Delhi on duty hike
New Delhi: Gold,in Delhi,on Tuesday,gained as much as Rs 565 per 10 grams,and is poised to go up further amid brisk buying after the government increased import duty on precious metals.
Gold of 99.9 and 99.5 per cent purity shot up by Rs 565 each to Rs 29,825 and Rs 29,625 per 10 grams,respectively,a level last seen in April.
Sustained buying by stockists and jewellers ahead of the festive and marriage season also influenced prices. PTI