Largest gold buyer raises import tax to cut deficit!
NEW DELHI, India (PNN) - January 22, 2013 – India, the world’s largest bullion buyer, increased taxes on gold imports to reduce a record current-account deficit and moderate demand for the precious metal that’s rallied for 12 straight years.
The duty on gold and platinum imports was raised to 6% immediately from 4%, Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi yesterday. A levy on gold ore, concentrate, and so-called dore bars for refining will be doubled to 4%, and an excise tax on refined gold will climb to 5% from 3%, the customs said on its website. Increased taxes may reduce demand in Asia’s third-largest economy after prices jumped 7.1% in 2012 as investors and central banks boosted purchases.
About 80% of India’s current-account deficit, the broadest measure of trade, tracking goods, services, and investment income, is due to gold imports, according to the Reserve Bank of India.
Last March, India doubled the tax on purchases of gold bars and coins to help narrow the current-account gap. Demand for gold still picked up significantly in the July-to-September quarter, the Reserve Bank of India said in its biannual Financial Stability report in December.
Gold imports are “a huge drain,” Finance Minister Palaniappan Chidambaram said Jan. 2. Purchases in the nine months through December were estimated at $38 billion, compared with $56.5 billion in 2011-2012, the finance ministry said in a statement yesterday.
India’s gold demand slid 28% in the 12 months through September, as jewelers held a strike in March and April to protest taxes on imports and as local prices surged to an all-time high, according to the World Gold Council, which ranked India as the biggest buyer in the period. Higher taxes and domestic prices will again be a drag on physical demand this year, said Joni Teves, an analyst at UBS AG in London.
The duty on gold and platinum imports was raised to 6% immediately from 4%, Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi yesterday. A levy on gold ore, concentrate, and so-called dore bars for refining will be doubled to 4%, and an excise tax on refined gold will climb to 5% from 3%, the customs said on its website. Increased taxes may reduce demand in Asia’s third-largest economy after prices jumped 7.1% in 2012 as investors and central banks boosted purchases.
About 80% of India’s current-account deficit, the broadest measure of trade, tracking goods, services, and investment income, is due to gold imports, according to the Reserve Bank of India.
Last March, India doubled the tax on purchases of gold bars and coins to help narrow the current-account gap. Demand for gold still picked up significantly in the July-to-September quarter, the Reserve Bank of India said in its biannual Financial Stability report in December.
Gold imports are “a huge drain,” Finance Minister Palaniappan Chidambaram said Jan. 2. Purchases in the nine months through December were estimated at $38 billion, compared with $56.5 billion in 2011-2012, the finance ministry said in a statement yesterday.
India’s gold demand slid 28% in the 12 months through September, as jewelers held a strike in March and April to protest taxes on imports and as local prices surged to an all-time high, according to the World Gold Council, which ranked India as the biggest buyer in the period. Higher taxes and domestic prices will again be a drag on physical demand this year, said Joni Teves, an analyst at UBS AG in London.
