India Said to Consider Lowering Gold Import Tax to 6% From 10%by
Tax raised three times in 2013 to curb higher imports
Demand seen shrinking in 2016 to the least in 7 years
India, the world’s second-biggest consumer of gold, is said to be considering cutting the import tax on the precious metal in order to curb its smuggling, according to people familiar with the matter.
The government is planning to reduce the duty to 6 percent from 10 percent now, said the people, who asked not to be named as they are not authorized to speak to the media.
Gold shipments to India, which accounted for a quarter of global demand in 2015, have fallen due to higher prices in the first half of this year, a crackdown on undisclosed income and the government’s decision to withdraw old high-value bank notes. The government had raised the import tax three times in 2013 to curb inbound shipments, narrow a record current-account deficit and stop a slump in the rupee.
“Smuggled gold is cheaper while those who import have to pay high cost.” said Praveen Shankar Pandya, chairman of Gem & Jewellery Export Promotion Council. “Duty structure should be such that it doesn’t encourage smuggling and brings in transparency.”
Commerce ministry spokeswoman Mattu J.P. Singh did not immediately respond to an e-mail seeking comment.
Smuggled gold imports were estimated to be in the range of 140 tons to 160 tons in 2016, higher than the 120 tons in the previous year, according to the World Gold Council. It estimated in November that consumption would be 650 tons to 750 tons this year, the lowest in seven years.