The Indian Bullion and Jewellers Association (IBJA) has raised an alarm against the import of silver at just 9 percent duty against the applicable 15 percent tax rate. In a letter dated July 17 to Revenue Secretary Sanjay Malhotra, IBJA revealed that a leading bank had imported silver this year at less than the applicable import duty, causing a loss to the state exchequer.
The letter, in the possession of BW, says that silver was imported by a bank under the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE. The CEPA agreement allows the import of goods from the UAE at a fixed rate of duty, which is lower than the applicable rates, to boost trade relations between the two countries.
IBJA officials say that in the case of silver, Finance Minister Nirmala Sitharaman had revised the import duty to 15 per cent in her 2023 budget, but the CEPA agreement was not revised.
“It seems that the Department of Revenue has not amended its notification by taking into consideration the normal duty structure of 15 percent on silver imports, which was hiked during the budget from 10 percent,” IBJA letter says.
What is the confusion around the duty structure?
Prior to the 2023 budget, the import duty on Gold and Silver was 10 percent. Hence, the CEPA agreement allowed bullion imports at 9.5 per cent, giving a concession of 0.5 per cent. But even after India’s annual budget hiked the import duty on bullion metals to 15 per cent, the duty structure under CEPA was still kept at 9 per cent and was not revised, which is now causing the confusion, IBJA officials said.