Budget 2021

Import duty cut on precious metals a major relief

Our Bureau Mumbai | Updated on February 02, 2021

‘Rationalised duty structure and simplified processes are fundamental to an organised trading market’

The government has reduced the import duty on gold and silver to 7.5 per cent from 12.5 per cent but added an agriculture infrastructure and development cess of 2.5 per cent, taking the overall duty to 10.75 per cent, including social welfare of 0.75 per cent.

Somasundaram PR, Managing Director, India, World Gold Council, said it is a much-needed incentive for the organised and compliant players in the industry. A rationalised duty structure and simplified processes are fundamental to an organised trading market.

Also read: Can reduced import duty trigger gold demand?

The regulatory clarity on domestic bullion exchange will spur infrastructure development and good delivery standards, enabling India to emerge as a major bullion trading hub.

Revision of the procedure for disposal of seized gold to expedite the process will further prevent illicit trade, he added.

Colin Shah, Chairman, Gem and Jewellery Export Promotion Council, said the cut in import duty would give the much-needed boost to the sector as the high duty on precious metals had made exports uncompetitive leading to the large Indian diaspora moving to Dubai, Hong Kong or other centres to buy jewellery there, he added.

The government has also removed the 2 per cent Online Equalisation Levy on B2B purchases from International Diamond Auctions. This will help jewellers buy directly from miners, added Shah.

Also read: New farm cess won’t pinch your pocket

Suvankar Sen, CEO, Senco Gold and Diamonds, said the duty reduction will support the government’s efforts to reduce gold smuggling.

Ahammed MP, Chairman, Malabar Gold & Diamonds, said higher import duty was not only promoting illegal gold transactions but also eroding government’s revenue. The government should also focus on strengthening the e-governance system to beef up the tracking mechanism of illegal transactions of gold.

Ashraf Rizvi, Founder & CEO, Digital Swiss Gold & Gilded, said making SEBI the regulator for gold exchanges in India hints at deeper regulation of digital transactions of the yellow metal, which is critical for earning consumer trust.

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Published on February 02, 2021
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