Gold Traders in India Seen Concerned Over Escalated Import Duty

The 3% provision for Goods and Services Tax (GST), on top of the high import duty of 12.5%, makes it necessary for customers to shell out 15.5% extra tax on gold purchases.

SEATTLE (Scrap Monster): The Jewellers Association Jaipur, India has raised concerns on the decision by the central government to hike duty on gold imports from 10% to 12.5%, expressing fears that the decision is most likely to impact market demand and boost smuggling of the yellow metal. Estimates indicate that gold smuggling at Jaipur International Airport has almost doubled in 2018-’19 upon comparison with the year before.

Sanjay Kala, President, Jewellers Association Jaipur noted that the 3% provision for Goods and Services Tax (GST), on top of the high import duty of 12.5%, makes it necessary for customers to shell out 15.5% extra tax on gold purchases. This makes gold much more expensive when matched with neighboring countries.

According to him, the ideal range of import duty on gold is between 4% and 6%, which in turn will aid decent trading, apart from keeping gold smuggling activities under control. The 12.5% tax levied on imports would only encourage gold smuggling, thereby posing big challenge to legal gold traders.

ALSO READ: Rising Gold Import Duty to Boost Grey Markets

Kala pointed out that high customs duty will deter foreign tourists from buying gold in India, as they would prefer buying it from neighboring countries, where tariffs are much lower. He urged the government to grant duty waiver on gold purchases at the airport to foreign tourists, which in turn will boost the demand for gold.

The Indian government, in its most recent budget, had raised gold import duty to 12.5%, in an attempt to discourage gold imports into the country.

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