New Delhi: On account of changes in duty structure in the international commodity market, the government on Tuesday announced restructuring of the customs and excise duty levied on precious metals, leading to the rise in the prices of gold and silver.

Acclaiming the move as a profit making measure, the Finance Ministry in its notification said that the step will help government earn revenue of Rs 600 crores in the current fiscal.

"The increase in the duty is expected to fetch an additional Rs 500- 600 crores for the balance fiscal year. It will help in containing mounting fiscal deficit upto some extent,” the ministry notification stated.

With effect from Tuesday, gold will become expensive by Rs 250 per 10 gm, silver by Rs 1,600 per kg and imported diamond by 2 percent. Platinum too will cost more.

Terming the move as need of the hour, Central Board of Excise and Customs (CBEC) Chairman SK Goel said, “The global market has witnessed a substantial increase in the prices of precious metals including gold and silver. The old rates were fixed 4-5 years ago. So, the change has been made to bring duties in tune with the market prices.”

Notably, as per the changes, customs and excise duty will now be levied on the value of the precious metals instead of a fixed amount, meaning that the incidence of duty will move up with the rise in prices of the goods.

With respect to excise, the duty on gold has been fixed at 1.5 percent of the value against the earlier fixed rate of Rs 200 per 10 gm. Silver will attract excise of 4 percent compared to a fixed duty of Rs 1,000 per kg.

Immediately after the new rates came into effect from Tuesday, gold was up by Rs 35 to Rs 27,925 per 10 gm, while silver gained Rs 575 to Rs 52,725 per kg in the bullion market.

It is worth mentioning, the import duty on gold collected Rs 2,500 crores for the exchequer, while the levy on silver mopped up Rs 300 crores last fiscal.