India Could Hike Gold Import Duty by 2%: IBJA
Currently, the duty on dore, which accounts for nearly 55% of Indian gold imports, stands at 9.35%.
SEATTLE (Scrap Monster): The India Bullion & Jewellers Association (IBJA) recommends boosting of import duty on gold by 2% from the existing 10%. Surendra Mehta, National Secretary, IBJA opined that the government should do the needful to impose 2% additional duty on gold imports. The money collected by way of this duty could be utilized towards repayment of sovereign gold bonds upon their maturity. This could stem the inflow of gold into the country and shift the investment demand for gold to sovereign gold bond.
Industry participants suggest re-introduction of the Prevention of Money Laundering Act (PMLA), which requires gold buyers to furnish their Permanent Account Number (PAN) details to jewelers for transactions exceeding INR 50,000. Such a measure could curb gold demand in the country. However, with el3ections around the corner, the government is unlikely to go with such harsh measures. Incidentally, PMLA had led to significant drop in gold sales as customers were hesitant to provide PAN details.
Also, gold bar imports on consignment basis makes immediate dollar payments compulsory. Instead, government should consider gold imports against letter of credits, which in turn provides for delayed dollar payments of anywhere between 6 months to one year. Also, the duty structure on gold dores must be rationalized to make it equivalent to those of gold bars. Currently, the duty on dore, which accounts for nearly 55% of Indian gold imports, stands at 9.35%.