The world's second-largest consumer of the precious metal, which is almost entirely purchased from abroad, has asked the Finance Ministry to consider lowering the tariff to around 10% from 12.5%, according to two people who asked not to be identified because the discussions are private.
The world's second-largest consumer of the precious metal, which is sourced almost exclusively from abroad, has asked the finance ministry to consider lowering the duty from 12.5% to about 10%, said two of the people, who asked not to be named because the deliberations are private. It is still unclear whether the recommendation will be adopted. A decision could be announced at or before the budget submission early next year, they added.
The matter presents Finance Minister Nirmala Sitharaman with a dilemma. She needs to keep imports down to curb the growing trade deficit, but smuggling is robbing the government of much-needed revenue. Her government had raised tariffs in July, after which the nation's purchases fell.
A Finance Ministry spokesperson declined to comment, and a Commerce Ministry representative did not respond to requests for comment via email or text message.
According to World Gold Council data, India's gold imports fell 23% from July to September compared to the same period the previous year.
According to the All India Gem and Jewellery Domestic Council, the bullion industry wants the July tax increase reversed and the goods and services tax reduced to 1.25% from the current 3%.
"Higher import taxes are causing problems in the domestic industry because they increase unofficial goods coming in and benefit the illegal trade," said Ashish Pethe, chairman of the Mumbai-based trade group. "Our long-term recommendation is that the duty be set at 4%-6%, where the government will receive adequate revenue and illicit trade will be eliminated."
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