Gold refiners ‘threatened’ by hike in excise on dore
The excise duty levy that has hit jewellers, who are protesting against a new 1 per cent manufacturing tax on gold and studded gold jewellery, is having ripple effects on bullion refiners too, but for a different reason. The government in the Budget for FY17 has, according to the Association of Gold Refineries & Mints, inadvertently created a situation threatening the very existence of gold refineries in excise paying zones across the country, to the benefit of refiners in excise-free zones, by increasing the levy on bars made from dore to 9.5 per cent from 9 per cent earlier.
The Association says the hike would compel them to stop operations. Earlier, the import duty on dore or raw gold was 8 per cent, which was hiked to 8.75 per cent in Budget FY17, something refineries in excise paying areas welcomed as that would partly level the playing field between them and their rivals in excise exempt areas of Rudrapur in Uttarakhand and Parwanoo in Himachal.
However, excise on gold bars made from dore (in excise paying areas) was raised by half a percentage point to 9.5 per cent — adversely affecting MMTC-Pamp India, Shirpur Gold Refinery, Chemmannur Gold Refinery & GCC Gujarat Gold Centre. These refineries, through the Association, complained to the finance minister Arun Jaitley that their operational existence becomes unfeasible with gross margin having now reduced to 0.5 per cent from a per cent earlier when duty plus excise was 9 per cent. Those importing dore benefit over those importing refined gold bars which attract import duty of 10 per cent. But this helps manufacturing and employment in India and also saves valuable foreign exchange, the lobby argues.
Courtesy: Economic Times