Government cuts excise duty on impure gold to 9.35 per cent

The Central government has reduced excise duty on impure or dore gold to 9.35 per cent from 9.5 per cent, widening the difference in import duty on pure gold to 0.65 per cent in a move aimed at making bullion manufacturing in the country more attractive. Finance minister Arun Jaitley had increased the excise duty on impure dore gold to 9.5 per cent from 9 per cent in this year’s budget, narrowing the difference between the duty on impure and pure gold, making refining of gold less profitable. The excise duty on pure gold is 10 per cent.

In addition, Uttarakhand has imposed an entry tax of 0.25 per cent on gold refineries in its excise free zone or EFZ, bringing down their margins to 1.05 per cent, while refineries in domestic tariff area or DTA have margins of 0.65 per cent. This has reduced disparity in margins and thereby improved the business prospects of bullion manufacturing in India for companies such as MMTC-PAMP and CGR Metalloys (known as Chemmannur Refinery earlier). There are 32 gold refineries in India, 27 of which process impure gold with a total refining capacity of 1,467 tonnes a year. Rajesh Khosla, managing director of MMTC-PAMP said, “Earlier, the duty differential was 0.5 per cent between imported pure gold and dore gold. Now it has increased marginally, which is in a way better for the refining industry in India.”

Courtesy: Economic Times