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Gold & silver import duty hiked to 10% to defend Re

The government on Tuesday increased import duty on gold, silver and platinum to 10 per cent with a view to arrest the declining value of rupee and contain the fiscal deficit to 3.7 per cent of the GDP.

'...the basis customs duty on standard gold and platinum (increased) from 8 per cent to 10 per cent and on silver from 6 per cent to 10 per cent', said a notification issued by the Finance Ministry. The government has also raised the duty on gold ore/ concentrates/dore bars and silver dore bars ranging from 7 per cent to 10 per cent.

The gold price in the Capital reacted by zooming to a four-month high, gaining Rs 565 per 10 gm to close at Rs 29,285. 'The revenue impact of these changes is estimated at Rs 4,830 crore for the remainder of the fiscal at current levels of import', the ministry said.
The government has also raised the excise duty on refined gold bar produced from gold ore/ concentrate and gold/silver dore bars or during copper smelting from 7 per cent to 9 per cent.

The notification added that excise duty on silver manufactured from silver ore or concentrates, silver/gold dore bars or during copper, zinc or led smelting from 4 per cent to 8 per cent.

These notifications were tabled in Parliament on Tuesday. The gold import in the current fiscal, according to official estimates, was likely to come down to 850 tonnes from 950 tonnes in 2012-13.

The hike in duty follows the announcement made by Finance Minister P Chidambaram on Monday that government will take steps to compress demand of precious metals with a view to check the sliding rupee value and contain current account deficit (CAD) to 3.7 per cent in 2013-14.
The current account deficit touched an all time high of 4.8 per cent of gross domestic product (GDP) in financial year 2012-13. As regards non-essential items, an official said that the ministry is working on it and notifications would be made in due course. The rupee, on account of various domestic and global factors, had slipped to 61.80 to a dollar earlier in the month.
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