The government reduced the gold duty drawback rate on August 23, nearly a month after revising the import duty. According to a CNBC TV18 report, the new rate for gold jewellery has been cut from ₹704.10 per gram of net gold content (with a purity of 0.995 or higher) to ₹335.50 per gram.
For silver jewellery and other silver items, the rate has decreased from ₹8,949 per kilogram (0.999 purity) to ₹4,468.10 per kilogram.
Duty drawback rates are designed to reimburse exporters for customs duties paid on imported inputs, ensuring that exports are not affected by domestic taxes. These rates are adjusted in line with import duties on gold and silver, as outlined in the budget.
In the Budget 2024 announcement on July 23, Finance Minister Nirmala Sitharaman proposed lowering customs duties on gold and silver to 6% and on platinum to 6.4%, aiming to boost domestic value addition in gold and precious metal jewellery.
However, no changes were made to the gold duty drawback rate at that time, which led to concerns that importers could benefit from lower raw material costs and higher drawback duties on exports. The recent adjustment addresses this issue, CNBC TV18 reported.
Finance Minister Sitharaman's proposal to cut import duties is expected to curb gold smuggling and free up blocked funds, according to a Mint report citing Central Board of Indirect Taxes and Customs (CBIC) Chairperson Sanjay Agarwal. The reduction in import duty is anticipated to release funds for the gems and jewellery sector, which relies heavily on gold.
India's gold imports surged to $48.8 billion in FY 2024, up from $33.6 billion in FY 2019, a 45.2% increase. Gold exports also rose from $6.59 billion in FY 2021 to $13.24 billion in FY 2024, as previously reported by Mint.
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