News Excerpt:

The Finance Ministry increased import duties on 'gold findings,' due to a drastic 5,000% surge in imports, reaching Rs 5,212 crore this fiscal year.

More details on news:

• A 50-fold increase in imports of ‘gold findings’ prompted the government  to hike import duties on gold and silver findings to 15%.
• Due to the difference in HSN (Harmonised System of Nomenclature) codes for gold and silver bars as compared to gold and silver findings, importers were exploiting a duty loophole and making use of the duty arbitrage to import gold in the form of findings and coins, rather than bars.
• The government also attempted to plug the loophole of lower duty for other forms of precious metals. The duty on coins of precious metals was also hiked from 11 % to 15 %.
• The import duty on spent catalyst and ash containing precious metals was hiked to 14.35 %.

How is gold taxed?  

• Import of gold draws custom duties under two heads, namely, Basic Custom Duty (BCD) and Agriculture Infrastructure Development Cess (AIDC).
• The latest revision will see BCD being charged at 10% of the assessment value and AIDC at 5%. The Social Welfare Charge (SWC) is not imposed on the commodity.
• At the final point of sale, that is to the consumer, applicable GST rates are levied on the landed cost.  
• Basic Customs Duty is assessed on the final value of the goods imported. It is calculated based on the cost of the product, insurance and other freight-related expenses, all combined.
• AIDC is collected as an additional duty with a purpose for financing agriculture-relevant and other developmental infrastructure.