Budget may see reduction in gold import duty

Budget may see reduction in gold import duty

Reduction may be to the tune of 4%

Budget may see reduction in gold import duty

The government may reduce import duty on gold to check a significant rise in smuggling of the yellow metal. The step may be announced in the Budget for 2017-18. Finance Minister Arun Jaitley is expected to present the Budget on February 1.

The duty may be reduced up to 4% on import, official sources said. Currently the customs duty on gold is 10%.

“There is room for cutting import duty on gold to bring it in alignment with the proposed Goods and Services Tax,” sources told DH.

The demand for gold and gold jewellery has gone down significantly after the cash crunch situation precipitated by demonetisation.

Gold traders have long demanded a cut in the import duty. The duty was raised in small tranches of 2% since early 2013. It was increased to 10% from an earlier 1%.
Traders believe that the move has been distorting price parity between domestic and international gold prices.

The UPA government had resorted to the move in the wake of a historic high current account deficit in 2013-14.

“Now the current account deficit (CAD) is under check, but smuggling has increased manifold,” sources said, adding that a reduction in duty will discourage smuggling to a large extent.

Gold imports to India in 2016 were lowest since 2003.
Jewellers have been raising their pitch that business has suffered because of lack of domestic supply of gold to jewellers.

Sources said, the government is also likely to come out with more attractive schemes to bring out idle gold lying with households in the country.

Earlier, the government had announced gold bond and gold monetisation schemes to bring into the economic system around 20 tonnes of gold lying idle with households and temple vaults. Subsequently the gold monetisation scheme was made more attractive, but deposits into the schemes are far short of the actual stock lying with Indians in their homes.