JOIN USJewellery made of gold and platinum will be costlier as the government has proposed doubling the import duty on these precious metals.
In the Budget, the Finance Minister has announced an increase in 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. 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 has 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.
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.
Rajesh Exports Limited Chairman Rajesh Mehta said, “All these steps have been initiated primarily to dissuade the Indian customer from buying gold to reduce the import bill of gold but it would not help in dissuading Indians from buying gold jewellery, but they would only end up increasing the price of gold and gold jewellery in India, which would further encourage the people to buy more gold for investment.”
Agreed Tanishq Vice-President (Retail & Marketing) Sandeep Kulhalli, “This will directly increase the input cost of gold procured by us for our jewellery manufacturing, and therefore, will increase cost of jewellery, which will need to be absorbed or passed on to the consumer. We are not sure if there will be any direct impact on consumers because of this alone.”