IBJA requests policy change as gold importers exploit loophole
The Indian Bullion and Jewellers Association has written to the Ministry of Finance to request a change in government policy on importing platinum alloy. The move follows a number of bullion importers classifying their refined gold imports as platinum alloy in order to pay a lower tax rate.
In order to pay lower import duties, various bullion importers class their imports as platinum alloy which accrues import duties of 10.75% as opposed to gold, which has an import duty of 15%, ET Bureau reported. The importers are, according to the IBJA, exploiting a current loophole in the law which enables them to do this which is costing the government crores in lost tax revenue.
The government increased the customs duties on gold from 10.75% to 15% just two months ago. Importers marking their 96% gold and 4% platinum consignments as platinum are not breaking any law as the regulations state that alloys containing over 2% or more by weight of platinum can be treated as an alloy of platinum.
Close to 22 tonnes of gold have been imported into India in consignments with over 2% of platinum by weight, industry sources told the Economic Times. This would amount to a tax revenue loss of over Rs 400 crore for the government.
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