Gold jewellery is set to get dearer, after the Government changed the rule for calculation of import duty on gold as well as silver.
The Finance Ministry has notified a new rule which says duty on gold and silver will now be calculated on the value of the imported metal. Earlier, the duty was collected as a fixed amount irrespective of price movement.
The revised formula will help the Government to collect an additional Rs 600 crore during the next two and half months, Ministry sources indicated.
For the consumer, the impact works out to an additional Rs 250 per 10 grams of gold, based on Tuesday's prices. On silver, the additional burden works out to Rs 1,600 a kg. New rules also apply to imported platinum and diamonds. The new rule has been made effective from Tuesday.
Mr S.K. Goel, Chairman, Central Board of Excise and Custom, said, “The old rates were fixed 4-5 years ago. In the last few years, prices have increased substantially so the change has been made to bring duties in line with market prices.”
Gold prices have gone up from Rs 14,000/10 gram to Rs 27,000/10 gram in the last two years, while silver prices have moved from Rs 11,000/kg to Rs 53,000/kg.
Commenting on the latest decision, Mr Sanjeev Agarwal, CEO, Gitanjali Gems and Jewellers, said, “This business works on pass through mechanism, so any increase will be borne by the consumer. Manufacturers and retailers' margin will not be affected.”
“Since the increase in the price could be up to 1 per cent, we do not expect any change in the demand,” he added. Mr Rajesh Mehta, Executive Chairman, Rajesh Exports, said, “Based on today's gold price, the effective duty on gold bars would be about Rs 56 per gram (including cess of 3 per cent on duty). The earlier effective duty was Rs 30.90 (inclusive of cess of 3 per cent on duty), hence the effective increase in duty would be Rs 25.10 or say Rs 25 per gram or Rs 250 per 10 grams.”
Similarly the duty on silver has also been increased to 6 per cent from the existing Rs 1,500/kg. It would mean that the effective duty on silver based on today's prices would be about Rs 3100/kg and silver would be expensive by about Rs 1600/kg to the retail consumers, he added.