India, the world’s biggest gold user, raised the tax on imports for a third time this year to curtail demand and contain a record current-account deficit that’s weakened the rupee to an all-time low.
The tariffs on gold and platinum imports were increased to 10 percent from 8 percent, while the levy on silver was boosted to 10 percent from 6 percent, the Ministry of Finance said in a notification tabled in parliament today. Taxes on shipments of gold concentrates, ores and dore bars will rise to 8 percent from 6 percent, while the duty on silver dore bars will climb to 7 percent from 3 percent, the ministry said in a statement.
Finance Minister Palaniappan Chidambaram plans to curtail gold imports to 850 metric tons this year to reduce the current-account deficit and boost capital inflows by allowing state-run financial companies to issue “quasi-sovereign” bonds to finance infrastructure investments. The deficit, mainly fueled by crude oil and bullion imports, is the biggest risk to the $1.9 trillion economy, according to the central bank. The rupee fell to a record low of 61.8050 per dollar Aug. 6.
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