Customs duty on gold, silver cut to 7.5%; industries laud move
Since the duty was raised from 10% in July 2019, prices of precious metals have risen sharply and to bring it closer to previous levels, we are rationalizing custom duty on gold and silver, the finance minister said.
Finance minister Nirmala Sitharaman in Budget 2021 proposals said that the government will rationalise customs duty on gold and silver. Currently, gold attracts 12.5% import duty. The government announced cut in customs duty on gold and silver to 7.5% from 12.5%. Indian imports bulk of its gold and silver requirements.
Since the duty was raised from 10% in July 2019, prices of precious metals have risen sharply and to bring it closer to previous levels, we are rationalizing custom duty on gold and silver, the finance minister said.
However, an Agriculture Infrastructure and Development Cess (AIDC) has been proposed on import of specified goods. To ensure that imposition of cess does not lead to additional burden in most of these items on the consumer, the basic customs duty rates has been lowered, the government said. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure.
On MCX, gold futures slumped 3% or about ₹1,500 per 10 gram to ₹47,918. In comparison, gold prices were 1.2% higher in global markets at $1,872.4 an ounce.
The bullion industry lauded the move.
“The cut will be favourable for the growth of Indian bullion industry. However, both will attract 2.5% of agriculture infrastructure and development cess. Being the world’s second largest gold consumer, India imports bulk of its gold and silver requirements.
Since prices of precious metals have surged in 2020, physical demand plummeted and imports have tumbled to multi-year lows. The total levy on gold currently is at 15.5%, including GST,” said Sugandha Sachdeva , VP — Metals, Energy and Currency Research, Religare Broking.
“With reduced duty, costs will come down, which is a big positive in the long-term for the demand outlook of gold. It will provide a boost to the gems and jewellery sector, which plays a vital role in the Indian economy, leading to a thrust towards manufacturing and export.”
The jewellery industry has welcomed the government’s move to cut import duty. “Reducing import duty on gold is a step in the right direction and in line with a long-standing demand of the industry,” said Ahammed MP, Chairman, Malabar Gold & Diamonds.
