The government reduced gold duty drawback rates from Rs 704.1 to Rs 335.50 per gram and for silver items from Rs 8,949 to Rs 4,468.10 per kilogram.
The government reduced the gold duty drawback rate on August 23, nearly a month after amending import duties.
The tax drawback rate for gold jewellery has been decreased from Rs 704.1 per gram of net gold content (with a purity of.995 or above) to Rs 335.50 per gram, as reported by CNBC TV18.
The tariff for silver jewellery and other silver items has been reduced from Rs 8,949 per kilogram (.999 purity) to Rs 4,468.10 per kilogram, guaranteeing comparable rates across silver products, according to the report.
The duty drawback rate is an amount used to repay exporters for customs charges paid on imported inputs. Its purpose is to guarantee that domestic taxes do not affect items destined for export. These rates are updated to reflect the budgeted import tariffs on gold and silver.
Budget 2024 announcement on gold duty
On July 23, Finance Minister Nirmala Sitharaman recommended a 6% reduction in customs duties on gold and silver in Budget 2024. She further reduced customs duty on platinum to 6.4%.
“To increase domestic value addition in gold and precious metal jewellery in the country, I propose reducing customs duties on gold and silver to 6% and on platinum to 6.4 percent,” Finance Minister stated during the Union Budget 2024 release.
However, during the Budget 2024 presentation, no changes were introduced to the gold duty drawback rate which may have resulted in gold and silver importers to get in the raw materials at a lower price and eventually get a higher drawback duty on exports. The revised duty drawback will fix this issue, the CNBC TV18 report said.
The Finance Minister’s proposal for a large drop in import tariffs on gold and silver will deter gold smuggling and free up blocked cash, according to Mint, citing Central Board of Indirect Taxes and Customs (CBIC) chairperson Sanjay Agarwal. The research also stated that because gold is the principal raw material for gems and jewelry, a drop in import duties might free up finances for such businesses.
Gold imports increased by 45.2% to $48.8 billion in fiscal year 2024, up from $33.6 billion in fiscal year 2019. India’s gold exports have also increased, rising from $6.59 billion in FY 2021 to $10.99 billion in FY 2022, $12.29 billion in FY 2023, and $13.24 billion in FY 2024.
