Govt hikes customs duty on gold, imposes cess on crude and additional duty on export of petrol and diesel

New Delhi, July 1, 2022

The Government has increased the customs duty on gold from 10.75% to 15% to curb imports of the precious metal and also imposed a cess of Rs 23,250 per tonne on crude but it has clarified that import of crude would not be subject to this cess.

The release said there had been a sudden surge in imports of gold. In the month of May, a total of 107 tonnes of gold was imported and in June also the imports have been significant.

"The surge in gold imports is putting pressure on current account deficit. To curb import of gold, customs duty has been increased from present 10.75% to 15%," it said.

The Government has also imposed a Special Additional Excise Duty (SAED)/cesses on exports of petrol and diesel at the rate of Rs 6 per litre on petrol and Rs 13 per litre on diesel, and an SAED of Rs 6 per litre imposed on exports of Aviation Turbine Fuel.

These steps, notified on June 30, would have no impact on domestic fuel prices, a press release from the Ministry of Finance said.

On the SAED imposed on crude, the release said crude prices had risen sharply in recent months.

"The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, the domestic crude producers are making windfall gains. Taking this into account, a cess of Rs. 23,250 per tonne has been imposed on crude. Import of crude would not be subject to this cess.

"This cess will have no adverse impact, whatsoever, on domestic petroleum products/fuel prices," it said.

Further, small producers, whose annual production of crude in the preceding financial year is less than 2 million barrels will be exempt from this cess.

Also, to incentivise an additional production over preceding year, no cess will be imposed on such quantity of crude that is produced in excess of last year production by a crude producer.

On the SAED/cesses on exports of petrol and diesel, the release said that while crude prices have increased sharply in recent months, the prices of HSD and petrol have shown a sharper increase.

"The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market," it said.

"In view of this, cesses equal to Rs 6 per litre on petrol and Rs 13 per litre on diesel have been imposed on their exports. These cesses would apply to any export of diesel and petrol from the country.

"As the above measure has been applied to exports, it has no implication on domestic retail prices of HSD and petrol," the release said.

At the same time, Export Policy condition has been imposed by the Directorate General of Foreign Trade (DGFT) that the exporters would be required to declare at the time of exports that 50% of the quantity mentioned in the shipping bill has been/will be supplied in the domestic market during the current FY.

"These measures would not have any adverse impact on domestic retail prices of diesel and petrol. Thus, domestic retail prices would remain unchanged. At the same time these measures will ensure domestic availability of the petroleum products," the release added.

About the SAED on ATF, the release noted that its prices had also risen sharply.

"Accordingly, on the same reasoning, as stated above for diesel and petrol, a cess of Rs 6 per litre has been imposed on exports of ATF.

"This measure will not have any adverse impact on domestic prices of aviation," the release added.

NNN