Centre plans to cut gold import duty to below 12%: Report


The Centre plans to reduce import duty on gold as higher taxes have made it more easier and profitable for smugglers as they can offer discounts thus denting the market share of banks and refiners, government and industry officials told Reuters.

This cut by India, which is the second-biggest consumer of the yellow metal, could lift retail sales by making it cheaper ahead of the peak demand season and support global prices.

It may also revive operations of local gold refineries, which nearly suspended refining for last two months as they could not compete with grey market operators. 

“The government is considering bringing the effective gold rate to below 12%. The proposal is being discussed. We will take a final call soon,” said a government official, who did not wish to be identified, reported Reuters.

The effective duty on gold is currently 18.45%, which includes 12.5% import duty, 2.5% agriculture infrastructure development cess and other taxes.

Grey market operators, who smuggle gold and sell it for cash to avoid duties, got a boost when government raised the basic import duty on gold to 12.5% from 7.5% in July.

Another official said the government was considering bringing the effective rate down to below 12%, reported Reuters. “We will take a final call soon,” he added.

An official at the Ministry of Commerce said it was in favour of cutting the import duty on gold, reported Reuters.

“Smuggling is going up,” said the commerce ministry official, adding that the duty could be cut in an upcoming budget.

Customs and other agencies seized 3,083.6 kg of gold illegally brought in last year up to November, the highest in three years.

Indian gold prices jumped to a record 56,850 rupees per 10 grams last week.

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