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Govt cuts imports tax on gold, silver to 7.5% from 12.5%

Govt cuts imports tax on gold, silver to 7.5% from 12.5%

KOLKATA: The gem and jewellery industry has got a boost with finance minister Nirmala Sitharaman reducing import duty on gold and silver to 7.5% from 12.5% in the Union budget for 2021-22. This will make gold and silver cheaper for consumers at home and make jewellery exports more competitive in global markets.

The duty on gold dore bar, or impure gold, has also been reduced to 6.9% from 11.85% and that on silver dore bar to 6.1% from 11% – a move that would give a fresh impetus to the bullion refining industry. India refines 100-150 tonnes of impure gold annually.

The finance minister also announced a Sebi-regulated domestic spot exchange for gold, which will make the industry more robust.

“The reduction in import duty of silver and gold would give the much-needed boost to the sector and help it to move to the next level,” Colin Shah, chairman of Gem & Jewellery Export Promotion Council, said. “In fact, high duty on precious metal had made our exports uncompetitive, leading to large Indian diaspora/NRI, moving to Dubai, Hong Kong or other centres to buy jewellery which was largely impacting the employment as well as business in India.”

He also said setting up of a Sebi-regulated gold exchange will “surely ease marketability and sale of gold”.

Arvind Sahay, chairperson of India Gold Policy Centre at Indian Institute of Management, Ahmedabad, said: “A domestic spot exchange could contribute to the process of formalisation of transactions in gold; such a process is an important part of making the Indian gold industry more robust and to less of a price taker. An international bullion exchange is already coming up in the country. It would be interesting to see how the proposed domestic exchange(s) fit(s) into the overall scheme of things that facilitates transactions and delivery of physical gold. A systemic approach is critical to ensure that the intended objectives are achieved. God (or the devil) is in the details. So one would want to see the details before commenting any further.”

Anargha Uttiya Chowdhury, director at Kolkata-based Anjali Jewellers, said the reduction in import duty will lower the price of gold, “thereby providing customers a better option to invest in gold”.

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