Business | Economy
Import taxes on bullion doubled to raise cash
India, the world's biggest consumer of bullion, doubled import taxes on gold and silver as the government sought to raise funds to spend on roads and supply food grain to the poor at below market rates.
- Bloomberg
- Published: 23:00 July 6, 2009
Mumbai: India, the world's biggest consumer of bullion, doubled import taxes on gold and silver as the government sought to raise funds to spend on roads and supply food grain to the poor at below market rates.
"Gold bars currently attract customs duty at the specific rate of Rs100 per 10 grams while other forms of gold [excluding jewellery] are chargeable to a duty of Rs250 per 10 grams. These rates were fixed in 2004 and have not been reviewed even as the price of gold has increased manifold. I propose to partially restore the incidence by increasing these rates to Rs 200 (Dh15) per 10 grams and Rs500 (Dh37.5) per 10 grams respectively. Along the same lines, the customs duty on silver [excluding jewellery] will be increased from Rs.500 per kg to Rs1,000 per kg. These revised rates would also apply to gold and silver, including ornaments that are not studded, when imported by a bona fide passenger as baggage," Pranab Mukherjee said.
"I fear that my proposals relating to gold and silver on the customs side would somewhat dent my popularity with women. I propose to salvage this by fully exempting branded jewellery from excise duty," the finance minister added.
The import levy may cool demand for jewellery in the South Asian nation, worsening the 55 per cent drop in imports by the country in the first five months of this year. Gold has fallen 7 per cent since breaching $1,000 in February.
"Imports were down 50 per cent in the first half and now even the remaining demand will evaporate," said Suresh Hundia, president of the Bombay Bullion Association, a group of traders and jewellers in Mumbai. "The government should have cut the tax to raise revenue by boosting imports."
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