Government reduces export drawback rates for gold and silver jewellery

Drawback Duty: Responding to the reduction of import duty over precious metals in the Union Budget, the government has drastically reduced the drawback rates on exports of gold and silver jewellery. A notification to this effect was issued by the Department of Revenue, stating that these rates have been slashed by over 50 per cent.

The revised rates reduced the drawback on gold jewellery exports to Rs 335.5 per gram of net gold content from the previous rate of Rs 704.1. In the case of silver jewellery and articles, the drawback rate was cut to Rs 4,468 per kilogram of net silver content from the earlier rate.

These are adjustments to the Duty Drawback Scheme, designed to refund the import duties and internal taxes that manufacturers pay on importing raw materials or components used in the manufacturing of goods that are exported. With this reduction in drawback rates, the government is rationalizing the refund scheme with the reduced import duties on gold and silver, which in the recent Budget were cut from 15 percent to 6 percent.

Ajay Sahai, Director General of the Federation of Indian Export Organisations, said that the drawback rates on gold and silver have been reduced by authorities since import duties on these items had been brought down recently. He added that the revised rates were aimed at checking undue benefit accruing to exporters from the tax structure and to see that trade takes place on a level-playing field.

The gems and jewellery industry is one of the biggest contributors to India's export economy and has been stretched out in this fiscal year. Exports from the industry reduced by 7.45 percent to $9.1 billion for the April to July period, thus clearly spelling out the challenges the industry has been reeling under in the present economic atmosphere. The drawback rates reduced even more and affected the sector while it was getting adjusted to the new fiscal policies.

With PTI Inputs