JUST A week before the presentation of Budget 2024-25, the Finance Ministry hiked import duties on a specific, relatively unheard category of the jewellery segment called gold findings, which are small components such as hooks, clasps, clamps, pins, screws used to hold the whole or a part of a piece of jewellery in place. Reason: a sharp surge of over 5,000 per cent in the imports of the gold findings this year.
The value of imports of gold findings rose to Rs 5,212 crore this financial year (up to January 6), over 50 times higher than imports worth Rs 102 crore seen in the previous year till January 31, a senior government official told The Indian Express. This prompted the ministry to raise import duty on gold and silver findings, alongside coins of precious metals, to 15 per cent, even as the import duty on the broader segment of gold and silver bars was kept unchanged.
“The duty on gold findings was raised as a sharp increase in their imports was recorded over the last two months, which reflected the misuse of the duty arbitrage with other gold items. There were concerns about evasion, so the duty was changed,” the official said.
Gold and silver bars attract a 15 per cent import duty, while gold and silver findings earlier faced 11 per cent import duty. Due to the difference in HSN (Harmonised System of Nomenclature) codes for gold and silver bars as compared to gold and silver findings, importers were making use of the duty arbitrage to import gold in the form of findings and coins, rather than bars. Elevated gold price along with high import duty on the metal are seen as one of the key reasons behind the increased cases of smuggling.
The pre-Budget hike in import duty on gold and silver findings was done through levying Agricultural Infrastructure Development Cess (AIDC) of 5 per cent and removing Social Welfare Surcharge (SWS) of 1 per cent. Earlier, gold and silver findings faced a 10 per cent levy of basic customs duty (BCD) and 1 per cent SWS, with the effective duty rate at 11 per cent.
Now, the government has levied AIDC of 5 per cent and removed 1 per cent SWS, while keeping BCD unchanged at 10 per cent, resulting in a total effective duty rate of 15 per cent. The new duty rates became effective from January 22.
The government also attempted to plug the loophole of lower duty for other forms of precious metals. The duty on coins of precious metals was also hiked from 11 per cent to 15 per cent. The import duty on spent catalyst and ash containing precious metals was hiked to 14.35 per cent (including 10 per cent BCD and 4.35 per cent AIDC) from 10.09 per cent earlier (9.17 per cent BCD and 0.92 per cent SWS), bringing it at par with gold and silver ore.
“The rate on gold and silver findings was equalised with gold and silver bars to prevent circumvention from the higher duty of gold and silver bars,” another official said.
Gold imports had jumped by 95 per cent year-on-year to $7.23 billion in October. During April-October, gold imports rose by 23.01 per cent year-on-year to $29.48 billion.
In November, gold imports moderated from the previous month to $3.45 billion, even as they remained up 6.24 per cent year-on-year.
In December, gold imports jumped by a sharp 156.47 per cent to $3.03 billion, compared to $1.18 billion in the year ago period. Cumulatively, during April-December, gold imports rose by 26.64 per cent year-on-year to $35.95 billion.
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First uploaded on: 06-02-2024 at 04:45 IST