In a bid to curb a surge in gold imports and check windfall profits being made by crude petroleum producers, the Government has raised the import duty on the yellow metal from 10.75% to 15% and levied fresh taxes on the export of petrol, fuel and ATF as well as the domestic sale of crude oil.
The higher gold import levies are expected to rein in India’s rising current account deficit and ease the pressure on the Rupee. As much as 107 tonnes of gold was imported in May and imports have been ‘significant’ in June as well, the Ministry said, stressing that the surge in gold imports is putting pressure on India’s current account deficit.
As per foreign trade data, India’s gold imports had shot up over 789% in May 2022 to cross $6 billion, compared to $677.7 million in May 2021.
A cess of ₹23,250 per tonne of petroleum crude has been levied in the face of the elevated global prices that were leading to windfall profits for domestic oil producers who sell their output at international parity prices even to domestic refineries. This cess will not apply on imported crude and will have no adverse impact on domestic fuel prices, the Finance Ministry said.
A Special additional excise duty or Cess has also been imposed on exports of petroleum products at the rate of ₹6 per litre on Petrol and Aviation Turbine Fuel, and ₹13 per litre on diesel, as exports have become more attractive for more domestic refineries.
Exporters would now also be required to declare at the time of exports that 50% of the outbound quantity of fuel has been or will be supplied in the domestic market during the current financial year. “These measures will ensure domestic availability of the petroleum products,” the Finance Ministry said.
“The higher duties on inbound gold shipments will slightly reduce the outflow on account of gold imports, and help provide stability to the INR to USD ratio, while the change in taxation on petroleum products will help reduce the recent uptick in the demand-supply gap for them,” said Abhishek Jain, partner (indirect tax) at KPMG India.
The cess on crude petroleum will not be levied for small producers with annual output of crude less than 2 million barrels in the previous financial year. Moreover, to incentivise additional production, no cess will be imposed on a firm’s crude oil output that is in excess of last year’s production.
