India raises import tax on gold to 12.5% from 7.5%

India fufills most of its gold demand through imports, which were putting pressure on the rupee which hit a record low earlier this week

The Centre on Friday raised the import duty on gold to 15% from 10.75% at present in order to check a sudden surge in import of yellow metal, which has a bearing on the country's current account deficit.

"There has been a sudden surge in imports of gold. In the month of May, a total of 107 tonnes of gold was imported and in June also the imports have been significant. The surge in gold imports is putting pressure on the current account deficit," a notification by the finance ministry said.

According to the World Gold Council, India's gold purchases in 2021 reached their highest in 10 years.

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The Centre also imposed taxes and cess of Rs 13 per litre on the export of diesel and Rs 6 per litre on the export of petrol. Besides, a cess of Rs 23,230 per tonne was imposed on domestically produced crude oil, a move that will take away windfall gains accruing to producers from high global oil prices.

The export duty on Aviation Turbine Fuel (ATF) was raised by Re 1 per litre.

The objective to increase the taxes is to increase the domestic availability of fuel, the ministry said. However, it said the move will not impact domestic prices.

Also Read | Centre slaps export tax on petrol, diesel; windfall tax on domestic crude oil

Export tax comes in the wake of oil refiners, particularly the private sector, taking away windfall gains from exporting fuel to markets such as Europe and the US. Reliance petroleum apparently exports 90% of its produce.

But India ships more than 85% of its crude requirements from abroad.