JOIN USWith spiralling gold imports putting huge pressure on the current account deficit, government tonight hiked the import duty on the metal to 8 per cent, up by 2 per cent, in a bid to rein in demand.
"The import duty on gold has been increased from 6 per cent to 8 per cent," Revenue Secretary Sumit Bose told PTI.
The import duty on another precious metal platinum too has been increased to 8 per cent from 6 per cent.
The Finance Ministry has issued two notifications announcing "raising basic customs duty on gold and platinum from 6 per cent to 8 per cent and certain consequential changes immediate effect from June 5, 2013".
This is the second hike in the duty in six months as gold imports touched an alarming 162 tonnes in May. The imports touched a staggering figure of USD 15 billion in the last two months.
The hike is aimed at curbing import of gold which is mainly responsible for rise in CAD impacting on the country's foreign exchange reserves as well as the rupee value.
The CAD, which is a difference between inflow and outflow of foreign currency, touched a historic high of 6.7 of GDP in the quarter ending December 2012. It is likely to have reached in the range of 5 per cent during 2012-13, much above the RBI's comfort level of 2.5 per cent.
Worried over the deteriorating CAD position, the government had in January increased the import duty on gold from 4 per cent to 6 per cent.
The Finance Ministry's action to raise duty follows curbs announced by the Reserve Bank on import of gold by banks as well as other entities.
The additional import duty on gold ores and concentrates for use in the manufacture of gold has also been increased to 6 per cent from 2 per cent and on gold dore bar (gold content not exceeding 95 per cent) to 6 per cent.