NEW DELHI, Jan 13: A hike in the import duty on gold to curb its imports and tax sops to encourage people to replace idle gold with financial instruments may be in the offing.
The Finance Ministry is said to be considering these moves which may find a mention in the Budget.
“In the last two months gold imports have risen. It is a cause of concern. Steps are needed…Something will be announced in Budget…May be an import duty hike,” a senior Finance Ministry official said.
Finance Minister P Chidambaram has already expressed concern over rising imports of the precious metal and hinted at hiking duty on gold imports to curb its demand.
The basic customs duty on standard gold bars is 4 per cent and the levy on non-standard gold is 10 per cent.
On concerns that higher import duty would lead to gold smuggling, the official said “that needs to be dealt with separately”.
The official further said the government could also come out with scheme to ensure productive use of gold which is lying idle with the people.
Chidambaram is scheduled to present the Budget for 2013-14 on February 28.
While expressing concern over the imports, the Finance Minister had appealed to the people to “moderate the demand for gold which leads to its large imports”.
Traditionally, India has been the world’s largest consumer and importer of gold.
Outflow of the foreign exchange on gold imports is impacting country’s Current Account Deficit (CAD), which has widened to USD 38.7 billion or 4.6 per cent of the GDP during the first half of the current fiscal.
The RBI also, in a draft report, has pitched for higher customs duties on gold and tax sops for people ready to channelise gold into other investments.
It pitched for introduction of products like Gold Accumulation Plan, Gold Linked Account, modified Gold Deposit and Gold Pension Product.
Gold prices closed at Rs 31,100 per 10 grams in New Delhi market.
Doubling of the excise duty to 4 per cent in the last Budget and the curbs that RBI imposed on gold loan value and banning banks from funding gold purchase by loan companies have led to drop in imports.
In April-October 2012, imports declined 35 per cent year-on-year and overall imports is set to drop over 17 per cent to 800 tonnes this year. (PTI)
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