Government has reduced Gold Duty Drawback Rate by Over Half Following 2024 Budget Import Duty Revision

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Government has reduced Gold Duty Drawback Rate by Over Half Following 2024 Budget Import Duty Revision

The government has reduced gold duty drawback rates from ₹704.1 to ₹335.50 per gram and silver duty drawback rates from ₹8,949 to ₹4,468.10 per kilogram.

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The government has reduced gold duty drawback rate on August 23, nearly a month after revising the import duty. According to a new notification, the rate for gold jewelry has been slashed from ₹704.1 per gram of net gold content (with a purity of .995 or higher) to ₹335.50 per gram, as reported by CNBC TV18.

Similarly, the duty drawback rate for silver jewelry and other silver items has been lowered from ₹8,949 per kilogram (.999 purity) to ₹4,468.10 per kilogram, ensuring uniform rates across all silver products, according to the report.

Duty drawback rates are designed to reimburse exporters for customs duties paid on imported inputs, ensuring that goods intended for export are not burdened by domestic taxes. These rates are adjusted in accordance with the import duties on gold and silver, as outlined in the budget.

Budget 2024 announcement on gold duty

In the Budget 2024 announcement on July 23, Finance Minister Nirmala Sitharaman proposed a reduction in customs duty on gold and silver to 6%. Additionally, she announced a cut in customs duty on platinum to 6.4%.

“To boost domestic value addition in gold and precious metal jewelry, I propose reducing customs duties on gold and silver to 6% and on platinum to 6.4%,” the Finance Minister stated during the Union Budget 2024 presentation.

However, the Budget 2024 presentation did not include any changes to the gold duty drawback rate. This may have allowed gold and silver importers to acquire raw materials at a lower price while still receiving a higher drawback duty on exports. The revised duty drawback rates aim to address this issue, according to a report by CNBC TV18.

According to a report on July 28, Finance Minister Nirmala Sitharaman’s proposal to sharply reduce import duties on gold and silver is expected to curb gold smuggling and free up blocked funds. The report, quoting Central Board of Indirect Taxes and Customs (CBIC) chairperson Sanjay Agarwal, highlighted that since gold is the primary raw material for the gems and jewelry sector, the reduction in import duty could help release funds tied up in the industry.

Gold imports surged from $33.6 billion in FY 2019 to $48.8 billion in FY 2024, marking a 45.2% increase. India’s gold exports also rose significantly, from $6.59 billion in FY 2021 to $10.99 billion in FY 2022, $12.29 billion in FY 2023, and $13.24 billion in FY 2024, as previously reported by The Chandigarh News.