Finance ministry increases import duty on gold, silver to 15% amid PM Modi's austerity call

In line with Prime Minister Narendra Modi's call for austerity measures, the union finance ministry has increased the import duty on gold, silver and other precious metals, as per a notification issued short while ago.

Effective import duty applicable on gold and other precious metals, including cess, will now be 15% against 6% earlier. 

When will the revised rates take effect?

The revised duty has come into force from the midnight.

The notification, issued by the Central Board of Indirect Taxes and Customs (CBIC), amends earlier notifications issued in 2018 and 2021.

As per the notification, a higher import duty will be applicable to gold, silver, platinum, jewellery and precious metal-related industrial imports.

The government has imposed a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports. 

The move is aimed at curbing imports amid the pressure on the currency and depletion of the forex reserves in the wake of high crude oil due to disruptions led by the U.S.-Iran war. India imports 85% of its energy needs leading to a major forex outgo. 

It may be noted that the gold imported from the United Arab Emirates under the fixed-quantity quota system will also face the same duty structure now. Prior to today's notification, it enjoyed concessional duty rates. 

The notification also revises duty rates on jewellery “findings”. These are the small components such as hooks, clasps, clamps, pins and screw backs used in jewellery making. Gold and silver findings will now attract 5% customs duty, while platinum findings will attract 5.4%.

What did PM Modi say on fuel, gold?

Prime Minister Narendra Modi on Sunday urged the citizens to reduce fuel consumption, postpone foreign travel and destination weddings abroad, and cut down gold purchases amid challenges posed by the West Asia crisis. PM Modi also said there is a need to bring back the culture of work from home. 

PM Modi said supply chains have been under pressure ever since the Covid pandemic and Ukraine crisis and the war in the West Asia has aggravated the challenges. He said India is rapidly progressing towards becoming a developed economy. "But we are facing colossal challenges as well," he added.