Indian government raises gold import duty to 6 percent

The Indian Central government has raised the import duty on gold from its present 4 percent to 6 percent. Also, import duty on platinum was pulled up to 6 percent. This step is directed at taming the demand for gold and platinum, and in turn reducing the country’s current account deficit.

The country’s current account deficit touched a high of 5.4 percent of the total economic output in the first half of the current fiscal (between July and September 2012). India is the largest gold consumption market in the world. The gem and jewellery industry is concerned that the increase in the tax may encourage gold smuggling. The government noted a possibility of taxes to be reviewed if demand is in moderation.

Also, the finance ministry is encouraging domestic sourcing of gold, by directing gold exchange-traded funds to deposit some of their gold holdings with banks and has eased the terms of gold deposit schemes of banks for individuals to deposit their idle gold, reports add.