By Anil Mathews (ScrapMonster Author)
April 26, 2016 08:03:00 AM
NEW DELHI (Scrap Monster): The Associated Chambers of Commerce and Industry in India (ASSOCHAM) has urged the government to revise the countervailing duty (CVD) on gold dore and excise duty on refined bars made from gold dore.
In a communication addressed to the country’s Finance Minister Arun Jaitely, the industry body urged the government to raise CVD on gold dore to 9% and lower the excise duty on refined bars made from gold dore to 9.25%. According to them, the above is required in order to restore balance between refineries in excise-payable areas and excise-exempt areas. This will help refineries in excise-payable areas financially viable and help them to cover revenue loss if any.
It must be noted that the Financial Budget for the current fiscal year had hiked the CVD on gold dore from 8% to 8.75%. Also, excise duty on refined gold bars made from mine dore was raised from 9% to 9.5%. The change in duty structure led to 50% reduction in gross margins for refineries in excise paying area i.e. from 1% to 0.5%. Also, gross margin for refineries in excise-exempt areas was reduced from 2% to 1.25%. Tehrefore, a hike in CVD on unrefined gold and cut in excise duty on refined gold bars is necessary to bring back the balance.
According to statistics, the domestic refining from mine dore has increased almost five-folds from nearly 5% in 2012-’13 to 25% in 2015-’16. The refining of dore saves lots of money in foreign exchange as value addition takes place within the country. In addition, it also generates thousands of jobs. The dore refining also brings in tax revenue for the government, as refining companies are required to pay direct tax on refining income. On the other hand, importing of finished gold widens the trade deficit as money flows out of the country.
ASSOCHAM urged the government to take necessary steps to expand the country’s refining capability. This in turn would play an important role to make government’s ‘Make In India’ initiative a bigger success.