MUMBAI/NEW DELHI:
Platinum imports jumped multiple times in September as refineries imported a large amount of gold containing small amounts of platinum, but registered the purchases at customs as a platinum alloy to avoid paying higher import duties, government and industry officials told Reuters .
Such a masking was possible because a tax official said it was a loophole created by a policy change in July that imposed tiered tariffs on gold, silver and platinum, as opposed to the previous policy of applying for all three. precious metals the same taxes were levied. .
In July, New Delhi raised the tariff on gold to 15%, but kept the tax on platinum imports unchanged at 10.75%.
“The change in excise duty allowed importers to investigate the loophole. Initially, they imported a small amount containing 3% platinum in August and were released as a platinum alloy by Delhi Customs,” said a senior industry official, who was not named. wanted to be called.
When their imports were approved, they brought in more gold as platinum and soon other refiners and trading houses joined them, pushing India’s platinum imports in September to about 27 tons from 1.14 tons a year ago, trade said. – and government sources.
In all of 2021, India had imported 10.59 tons of platinum, according to data collected by the Ministry of Trade and Industry.
A Mumbai gold trader said refiners were abusing the government rule that says, “An alloy containing 2% or more platinum must be treated as an alloy of platinum.”
“The rule was created when platinum prices were higher than gold. In recent years, platinum prices collapsed. Yet traders could not use the rule because the import duties on both commodities were the same. After the excise tax hike in July, refineries started this loophole in the law,” said the trader.
The Dubai-based gold refineries mixed 2% to 5% platinum into gold bars exclusively for Indian buyers, said the Dubai-based gold trader, who declined to be named.
The government should immediately raise tariffs on platinum to 15% to stop this practice of importing gold under the guise of platinum, said Surendra Mehta, secretary of the India Bullion and Jewelers Association (IBJA).
India is the world’s second largest consumer of gold and depends on imports to meet most of its needs.
“Traders pay 4.25% lower import duties for gold classified as platinum. This gives them an advantage to offer discounts over competing suppliers,” said Chanda Venkatesh, president of CapsGold, a Hyderabad precious metals trader.