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India raises tariffs on some gold, silver items to fix loophole

Govt brings duties on imports of silver and gold clamps, pins, and screws on par with those on gold and silver bars

India raises tariffs on some gold, silver items to fix loophole
[Source photo: Chetan Jha/Press Insider]

India this week raised the import duty on gold and silver ‘findings’ such as pins, clamps, screws and hooks to align their tariff with other forms of the precious metals.

Higher imports of gold and silver ‘findings’ as well as coins of precious metals over the past two months prompted the government to plug the loophole by raising the duties effective Tuesday.

The ‘findings’ were earlier subjected to a basic custom duty of 10%, plus a social welfare surcharge of 1%, making the earlier effective tariff 11%.

Now, an additional 5% agriculture infrastructure development cess has been levied on ‘findings’, while the social welfare surcharge of 1% has been withdrawn, making the current overall duty 15%.

The government also raised the levies on coins of precious metals from the earlier 11% to 15%, in line with the prevalent duties on gold and silver bars.

Duties on imports of spent catalyst and ash containing precious metals have also been raised to 14.35% from 10.9% earlier.

Catalysts speed up or facilitate a chemical reaction without themselves being consumed in the process. In some industrial processes, such as petrochemical and refining industries, catalysts often contain precious metals such as platinum, palladium, or rhodium.

Over time, the catalysts degrade or ‘spend’ due to repeated use and exposure to high temperatures and chemical reactions. Spent catalysts still retain a significant part of the precious metals and are often recycled to recover the valuable components.

Similar to spent catalysts, residual ash produced during industrial processes can contain trace amounts of valuable metals such as gold, silver, and platinum. The ash is usually processed to extract these metals.

Duties on these items earlier included a 9.17% basic customs duty and a 0.92% social welfare surcharge, bringing the overall duty to 10.09%. The duty structure now comprises a 10% basic customs duty component, plus a 4.35% agriculture infrastructure development cess, making the effective duty 14.35%.

The agriculture infrastructure development cess was first levied on some items in the 2021-22 budget.

Imposition of the new rates comes a week ahead of the interim budget, which will be presented by finance minister Nirmala Sitharaman on 1 February.

“I am not going to play a spoilsport, but it is a matter of truth that the budget that will be announced will just be a vote on account because we will be in election mode. So the budget will just be to meet the expenditure of the government till a new government comes to play,” Sitharaman had said.

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