Gold imports adding to revenue growth, no case for a lower levy: Revenue secretary

The government had raised import duty on gold to 15 percent from 10.75 percent in 2022 to curtail current account deficit.

Despite a high import duty on gold at 15 percent, the government is not looking to slash it as yellow metal shipments are expected to touch 800 tonnes in 2023-24, leading to high growth in revenue, a top finance ministry official said.

“There is no proposal to reduce duties on gold. Gold imports have given us good revenue. So there is no case, no proposal right now. In nine months this fiscal, gold imports are at 617 tonnes. So gold imports should exceed 800 tonnes at this rate,” Revenue Secretary Sanjay Malhotra told Moneycontrol in an interview.

From 678 tonnes of imports in FY23, it is expected to rise to 800 tonnes in this fiscal. The government had raised import duty on gold to 15 percent from 10.75 percent in July 2022 to curtail current account deficit. The industry has been asking to lower the import duty as it leads to an increase in smuggling activities.

“So, whatever is the impact of smuggling… I am getting almost 40 percent more revenue – from 10.75 percent to 15 percent, which is about a 40 percent increase,” Malhotra said.

Gold imports in 2019-20, which was a non-Covid year, stood at 720 tonnes while in 2020-21 at 651 tonnes. In 2021-22, 879 tonnes of gold were imported while in 2022-23 678 tonnes was imported.

Gold imports have obviously moderated after the government introduced the 15 percent import duty on gold in 2022, he said.

The Gem & Jewellery Export Promotion Council (GJEPC) has sought a reduction in import duty on gold bar (7,108) from 15 percent to 4 percent to clear duty blockage worth around Rs 982.16 crore, which could help create more working capital for the industry. GJEPC also recommended lowering of import duty on Silver Bars (7,106) from 10 percent to 4 percent.

In the 2023-24 budget, the import duty on silver was increased to align with the duty structure of gold. While, the basic customs duty on silver was raised to 10 percent from 7.5 percent along with a hike in agriculture infrastructure and development cess on imports to 5 percent from 2.5 percent earlier.

In the 2021-22 Budget, the government had introduced AIDC cess on certain items to fund agricultural infrastructure.