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| Customs duty on gold, silver doubled | |
| BS Reporter / Mumbai July 6, 2009, 16:38 IST | |
Explaining the need for a revision in the levy on precious metals because of a manifold increase in prices, the Finance Minister doubled the customs duty on import of gold and silver while presenting the Budget for 2009-10.
Taking the base from 2004 when the customs duty was levied on precious metals, the Minister raised import duty on serially numbered gold bars (other than tola bars) and gold coins from Rs 100 per 10 gm to Rs 200 per 10 gm.
Similarly, the customs duty on other forms of gold (excluding jewellery) has been raised from Rs 250 per 10 gm to Rs 500 per 10 gm.
The government also raised the import duty on silver (excluding jewellery) from Rs 500 per kg to Rs 1,000 per kg, explaining that these rates were fixed in 2004 and have not been reviewed even as the price of gold has increased several times.
Bhargav Vaidya, an analyst with the Mumbai-based precious metals research firm B N Vaidya & Associates, said, “The increase in duty on gold is in line with expectations, but on silver it is a bit surprise.”
“The only disappointment for us is the use of the funds raised through the levy. The government will use the fund for the development of the country while the industry, in its pre-Budget recommendations, had suggested that the fund raised through tax levies should be used for the welfare of artisans in the industry,” Vaidya said.
Suresh Hundia, the president of the Bombay Bullion Association (BBA), commented that the levy was unlikely to fetch additional revenue to the government as the measure would raise the cost of gold products, but might depress sales in the domestic market. Hundia added that the import of gold would decline further due to the increase in import duty.
India’s gold import during the calendar year 2008 dipped 45 per cent to 450 tonnes.
Barring a marginal impact on gold prices in India, the measure will have no impact on overall sales, said Prithviraj Kothari, director of Riddhi Siddhi Bullion, a Mumbai-based bullion trading firm.
When the customs duty was levied at Rs 100 per 10 gram in 2004, the price of gold was hovering at around Rs 5,000 per 10 gram. But since then the price of the yellow metal has climbed three-fold. Hence, buyers will happily accept the revised price, Kothari added.
These revised rates will also apply to gold and silver, including ornaments that are not studded, that are imported by a bonafide passenger as baggage.
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