Industry body Assocham today asked the government to raise countervailing duty (CVD) on gold dore to 9 per cent, besides keeping excise duty on refined bars made from gold dore at 9.25 per cent.
"This is required in order to restore balance between refineries in excise paying areas vis-a-vis excise exempt areas, since refineries are located almost equally in both areas, as such there would be no revenue loss and it will, Assocham said.
In a written communication to Finance Minister Arun Jaitley, Assocham said, "The advantage of dore refining over importing finished gold is that value addition gets done within the country thereby generating employment, saving foreign exchange and generating tax revenues as direct taxes are paid to government on the refining income."
While India imports about 800 tons of gold annually, the share of domestic refining using mine dore as feedstock has increased steadily from 5 per cent in 2012-13 to 25 per cent in 2015-16, it said.
Assocham said there is ample opportunity to grow refining capacity further across the nation, which will only add to 'Make in India' and simultaneously move up the quality chain.
In the Budget 2016-17, Finance Ministry has notified an increase in CVD on mine dore from 8 per cent to 8.75 per cent, increase in excise duty on refined gold bars manufactured from mine dore from 9 per cent to 9.5 per cent.
While, excise duty exemption under existing area based exemption on refined gold stands withdrawn.
So far as impact on refineries in excise paying area is concerned, their gross margin gets reduced to half i.E. From one per cent to 0.5 per cent thereby making them inviable, said the industrial body.
Besides the gross margin for refineries in excise-exempt areas also stand reduced from two per cent to 1.25 per cent, thus creating a significant balance in favour of excise-exempt refineries, it added.
