Interim Budget 2024: Will Govt Reduce Import Tax On Gold Bars In Upcoming Budget?

India's commerce ministry has supported a long-standing demand from the jewelry industry to reduce import tariffs on gold bars, reported Reuters quoting government and industry officials amidst concern that the duties were harming the country's faltering jewellery exports.

The commerce ministry's support for lowering the tariffs comes ahead of the federal budget due next week. If a reduction in the taxes is approved, Finance Minister Nirmala Sitharaman can likely announce the decision in her interim budget on February 1.

As per the report, the Gems and Jewellery Export Promotion Council (GJEPC) has urged the government to reduce import tariffs on all forms of gold to 5% from 15%, and lower the customs duty on cut and polished diamonds, to reduce costs for India's jewellers. "India's customs duty on gold is among the highest globally," said Vipul Shah, chairman of the GJEPC. Lower duties would promote exports and reduce imports through illegal channels, he said.

In the upcoming Interim budget 2024, the gold & diamond industry expects the government to focus on making India a Global Jewellery Hub for the world. According to a report by the World Gold Council, India is the world's second-largest consumer of gold jewelry and the interim Budget with a strategic push can give the industry a shot in the arm.

Earlier this week, the government hiked the import duty on gold and silver findings - hooks, clasps, and other fittings used in making jewellery - to 15% from 11% to keep importers from bringing in gold classified as findings to save on taxes.

Millions of Indians visiting Dubai and Singapore have also been bringing gold jewellery back home in order to escape the comparatively high local prices due to the import taxes, industry leaders said, hurting the local industry and cutting into state revenue.

Gold prices increased in India on Friday (Jan 26). In India, the price of 10 grams of 24-carat gold at the time of writing this article is Rs 63,050. The price of the same quantity of 22-carat gold and 18-carat gold in the country is Rs 57,800 and 47,290 respectively.

Gold Futures, maturing on February 5, 2024, closed 0.02% lower at 61950 on the Multi Commodity Exchange (MCX) on Thursday.