Import tax on gold hiked from 7.5% to 12.5%

India: The government has raised the basic import tax on gold to 12.5 percent from 7.5 percent.

The step has been taken to curb imports as the rupee slumped to a record low.

India, the world’s second-biggest consumer of gold, is currently staring at higher trade and account deficits amid volatile global macroeconomic conditions.

The country’s trade deficit in May ballooned to a record-high $24.29 billion. India imported gold worth $6.03 billion in May, a nine-fold rise from a year earlier.

India had imported the most gold in a decade last year as demand recovered after the pandemic. Raising import duties on goods is one way to curb imports by making them costlier.

This step is a reversal of last year when the Centre cut the tax to 7.5 percent in the budget.

Countries such as China, the USA, and Singapore have done away with the import duty on gold to strengthen the domestic market.