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FM may raise Gold import duty to 6% to rein in current account deficit

By Religare

FM may raise Gold import duty to 6% to rein in deficit
The finance ministry is leaving no corner untouched for reining in its current account deficit. Media reports said that it is now considering raising the gold import duty by 2 per cent to 6 per cent, as rising demand for the yellow metal continues to hit import bill of India.

However, the move, which may be announced as a part of the Union Budget, may not yield desired results, said some experts. They said that it will increase the risk of smuggling of gold, while buyers may not actually reduce their demand, despite 2 per cent rise in the import duty, for the precious metal which has delivered attractive returns in the past.

Earlier this month, finance minister P Chidambaram had said that government will have to make it costlier to reduce its demand.

In January last year, basic Customs duty was raised from Rs 300 per 10g to an ad valorem rate of two per cent on standard gold bars and five per cent on non-standard ones. And then it was doubled to 4 per cent and 10 per cent respectively.

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