The Central Government on 13 August 2013 raised customs duty on gold, silver and platinum to 10 percent in a bid to curb the surging imports and burgeoning Current Account Deficit.
According to the notification of the Central Board of Excise and Customs, the duty on gold and platinum was raised from 8 percent to 10 percent and the levy on silver was raised from 6 percent to 10 percent. This step would also collect an additional 4830 crore rupees to the exchequer.
This is the third time that the Government has raised the duty on gold in 2013 with a view to containing its imports, mainly responsible for spurt in CAD which touched at a record high of 4.8 percent in 2012-13.
Import of gold went up by a huge 87 per cent from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period of 2013. In value terms, the increase was 68 per cent from 56488 crore rupees to 95092 crore rupees.
In the case of silver, import during April-July 2013 was valued at 12789 crore rupees in comparison with 4281 crore rupees during the corresponding period of 2012, registering a 200 per cent increase.
The Government is also planning to announce more measures to curb other non-essential imports, including luxury items, in order to contain the Current Account Deficit to 3.7 percent of Gross Domestic Product (GDP) in 2013-14 compared with 4.8 percent of GDP in the last fiscal year (2012-13).
The basic purpose of enhancing the import duty was to curb the import of the precious metals to check the Current Account Deficit (CAD). CAD is the difference between inflow and outflow of foreign currency.
A high Current Account Deficit impacts the value of currency which in turn makes imports expensive and adds to the fiscal deficit.
When: 13 August 2013