Budget 2017: Gold import duty not likely to come down

Tarun SharmaMoneycontrolGold prices may continue to remain on the higher side as the import duty on gold is unlikely to come down this Budget.Currently, the government is paying six percent implicit subsidy on gold after imposing ten percent import duty on the shiny metal. Subsidy paid to middle class on gold was second highest paid subsidy at Rs 10,800 crore, after LPG at RS. 28,219 crore. Cost due to this gold subsidy is more than railway subsidy, which the middle class gets from the government. As per the Economic Survey: “The top 40 percent population estimated based on expenditure distribution as per NSS data of 2011-12 is assumed to be the “middle class”. Effective subsidy rate is the difference between normative tax rate (50 per cent for LPG and Aviation turbine fuel, 14 percent service tax for railways and 6 per cent for gold) and actual subsidy/tax rate.”After reviewing the Economic Survey, Surendra Mehta, Indian Bullion and Jewelers association National Secretary told Moneycontrol.com “We are not expecting any cut in import duty of gold after economic survey and expect GST rate would be around 4%.” Earlier, Jewelers associations was expecting 1.25% Goods and service tax (GST) rate for gold. As per economic survey, Gold and silver imports declined by 35.9 per cent this year. Jewelry sector is one of the most affected sectors due to demonetisation. Economic survey indicated job loss in jewelry sector.