Gold Imports: Govt Cuts Duty Drawbacks

More than a month after slashing the import duty on bullion metals from around 15 per cent to just 6 percent in the annual Budget, mainly to discourage large scale smuggling, the government has only now cut down duty drawbacks. Duty drawback refers to the refund of customs duties and internal taxes paid while importing goods, which in turn are used to manufacture final products exported from India. For instance, refund of custom duties and taxes paid on gold and silver imported that is used to manufacture jewellery. While duty was slashed, the drawbacks still left the incentives open for smuggling racketeers.  

On August 23, the government cut the gold duty drawback rate. According to the new notification, for gold jewellery, the duty drawback rate has been reduced from Rs 704.1 per gram of net gold content (with a purity of .995 or more) to Rs 335.50 per gram. The rate for silver jewellery and other silver items has been cut from Rs 8,949 per kilogram (.999 purity) to Rs 4,468.10 per kilogram, ensuring consistent rates across silver products.

The government notification came within 24 hours after the India Bullion & Jewellers Association Ltd (IBJA) highlighted that drawbacks were yet to be rolled back.

"Govt. changed the duty on Gold from 15% to 6% but forgot to change duty drawback on Gold exports. Duty drawback is still at Old duty rate of 15%. Kindly change the duty drawback rates," a post from IBJA on social media platform X said.