जनभावना टाइम्स ਇੰਡੀਆ ਡੇਲੀ ਪੰਜਾਬੀ इंडिया डेली लाइव

Why customs duty was reduced on gold in the Union Budget 2024? Explained

The reduction of customs duty in a budget can happen due to several reasons, which may vary depending on the economic and policy objectives of the government at that time of announcement of the budget.

Author
Edited By: Top Indian News Desk
Follow us:
Nirmala Sitharaman

Nirmala Sitharaman (ANI)

Union Finance Minister Nirmala Sitharaman on July 23 announced a sharp cut in import duties on gold and silver, from 15 per cent to only 6 per cent, with an aim to end the decade-old approach of discouraging gold buying. Not only has this, the Union Budget 2024-25 also met the diamond industry’s age-old demand for a safe harbour to overseas mines.

According to the experts, the significant cut will be directed towards the advantage that will help curb the import of gold through illegal channels. As per statistics, the smuggling cost counted for 6-7 per cent, while the total GST was 18 per cent. Now, due to the change in the percentage, smugglers will lose their profits.

Here, it is important to note that the announcement of the tariff cut caused a 4-5% decline in the price of gold and silver on MCX futures. There was a comparable decline in the physical market. The standard price of gold in Mumbai's jewelry market decreased by 4.9% to Rs 69,323 per 10 grams, while the price of silver decreased by 3.7% to Rs 84,919 per kg.

The reduced customs duty will impact: 

  • Custom Duty on three medicines fully removed, to provide relief to cancer patients.
  • Basic customs duty on mobile phone, mobile PCBA and mobile charger to be reduced to 15%
  • Also, 25 critical minerals are to be exempted from customs duties and basic customs duty on two of them are to be reduced. 
  • Custom duty proposed to be removed on oxygen-free copper for the manufacture of resistors and certain parts for the manufacture of connectors to be exempted.

  • Reasons for reductions in Custom Duty

The reduction of customs duty in a budget can happen due to several reasons, which may vary depending on the economic and policy objectives of the government at that time of announcement of the budget. Here are some common reasons why customs duties might be reduced:

Promotion of Trade: Lowering customs duties can make imported goods cheaper, thereby promoting international trade and increasing imports. This can benefit consumers by providing access to a wider range of goods at lower prices.

Boosting Manufacturing: Reduced customs duties on raw materials and intermediate goods can lower production costs for domestic industries, encouraging manufacturing and industrial growth.

Attracting Investments: Lower duties on capital goods or components used in manufacturing can attract foreign investment and encourage domestic industries to upgrade technology and infrastructure.

Inflation Control: Lowering duties on essential goods or commodities can help control inflation by reducing prices and making them more affordable for consumers.

International Relations: Tariff reductions can be part of bilateral or multilateral trade agreements aimed at fostering better diplomatic and economic relations with other countries.

Economic Stimulus: During economic downturns or recessions, reducing customs duties can stimulate domestic consumption and overall economic activity.

Competitiveness: Lowering duties can improve the competitiveness of domestic industries against imported goods, thereby protecting and supporting local businesses.

Revenue Considerations: In some cases, duty reductions might be offset by other measures to maintain revenue neutrality, or they might be part of broader tax reform initiatives.

However, it's important to note that the specific reasons for duty reductions can vary significantly depending on the country's economic goals, trade policies, and international relations.

 

Also Read

Tags :

Related News

Recent News
×