India imposes gold sales tax on top of record import duty
By Rejendra Jadhav
Monday, February 29, 2016
MUMBAI -- India has reintroduced a local sales tax on gold jewellery after a gap of four years, on top of record import duty, in a move officials hope will dampen demand for the precious metal in the world's second biggest consumer.
Successive governments in Asia's third largest economy have struggled to curb Indian appetite for gold despite the imposition of a 10 percent import duty in 2013 and other restrictions introduced from time to time.
Annual imports of up to 1,000 tonnes of gold, accounting for about a quarter of India's trade deficit, have also prompted the government to launch a scheme to mobilize a pool of more than 20,000 tonnes of the metal lying idle in homes and temples.
Finance Minister Arun Jaitley, presenting his third budget today, announced an excise duty of 1 percent on gold and diamond jewellery. A report from his ministry on Friday said gold was under-taxed in the country, where the richest 20 percent account for roughly 80 percent of gold purchases.
Jewellers said the new duty will cut demand, which could eventually put a brake on the safe haven rally in global bullion prices. ...
More curbs typically lead to more illegal trade. Unofficial gold transactions have been rising since India made it mandatory for customers to disclose their tax code for high-value purchases. ...
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