Customs duty on gold, silver and platinum was today hiked to 10 per cent in third revision this year in a bid to curb the surging imports and burgeoning CAD, a decision that will also rake in an additional Rs 4,830 crore to the exchequer. While the duty on gold and platinum was raised from 8 per cent to 10 per cent, the levy on silver was hiked by 4 per cent, according to the notifications tabled in Parliament by Finance Minister P Chidambaram.
Revenue Secretary Sumit Bose told reporters later that government was still working on the proposed hike in import duties on non-essential goods, an indication of which was given by Chidambaram yesterday. He said the basic purpose of enhancing the duty was to curb the import of the precious metals to check the Current Account Deficit (CAD) and not to raise money. Shortly after the hike was notified, bullion traders said the price of gold will go up by Rs 600 per 10 gms. Continuing its rising streak for the fifth straight day, gold prices rallied to a four-month high by rising Rs 565 to Rs 29,825 per ten grams in Delhi. This is the third time that the government has raised the duty on gold this year with a view to containing its imports, mainly responsible for spurt in CAD which touched at a record high of 4.8 per cent in 2012-13. Import of gold went up by a huge 87 per cent from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period this year.
In value terms, the increase was 68 per cent from Rs 56,488 crore to Rs 95,092 crore. In the case of silver, import during April-July 2013 was valued at Rs 12,789 crore in comparison with Rs 4,281 crore during the corresponding period year ago, registering a 200 per cent increase. The decision to raise duties follows announcement made by Chidambaram yesterday that government would take steps to compress the demand of precious metals, oil and non-essential goods to contain CAD at USD 70 billion or 3.7 per cent of GDP in 2013-14. It was USD 88.2 billion or 4.8 per cent of GDP last fiscal.