Government cuts excise duty on impure gold to 9.35 per cent

KOLKATA: The Central government has reduced excise duty on impure or dore gold to 9.35% from 9.5%, widening the difference in import duty on pure gold to 0.65% in a move aimed at making bullion manufacturing in the country more attractive.

Finance minister Arun Jaitley had increased the excise duty on impure dore gold to 9.5% from 9% in this year’s budget, narrowing the difference between the duty on impure and pure gold, making refining of gold less profitable. The excise duty on pure gold is 10%.

In addition, Uttarakhand has imposed an entry tax of 0.25% on gold refineries in its excise free zone or EFZ, bringing down their margins to 1.05%, while refineries in domestic tariff area or DTA have margins of 0.65%. This has reduced disparity in margins and thereby improved the business prospects of bullion manufacturing in India for companies such as MMTC-PAMP and CGR Metalloys (known as Chemmannur Refinery earlier).

There are 32 gold refineries in India, 27 of which process impure gold with a total refining capacity of 1,467 tonnes a year. Rajesh Khosla, managing director of MMTC-PAMP said, “Earlier, the duty differential was 0.5% between imported pure gold and dore gold. Now it has increased marginally, which is in a way better for the refining industry in India.”