Import duty on gold: Gold prices plunged over Rs 2,100 on Monday after the Union Finance Minister Nirmala Sitharaman announced the changes in customs import duty rate for precious metals.
So far in the trade, Gold April futures have tumbled Rs 2,136 to Rs 47,201 per 10 grams while the silver March futures surged Rs 4,720 to Rs 74,426 per kg. On Monday, the government announced a cut in import duty on gold and silver, which will help bring down the prices in the domestic market and boost the exports of gems and jewellery. “Gold and silver presently attract a basic customs duty of 12.5 per cent. Since the duty was raised from 10 per cent in July 2019, prices of precious metals have risen sharply. To bring it closer to previous levels, we are rationalising customs duty on gold and silver,” Finance Minister Nirmala Sitahraman said. The customs duty on gold and silver has been reduced to 7.5 per cent.
सोने पर इंपोर्ट ड्यूटी 12.50% से घटाकर 10% कर दी गई (Import duty on gold reduced from 12.50% to 10%)
While gold and silver will attract agriculture infrastructure and development cess at the rate of 2.5 per cent and social welfare surcharge of 10 per cent. Including the GST, the total tax on gold and silver would be around 13.75 per cent, which was at 15.50 per cent, earlier. Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told Financial Express Online, that gold prices witnessed a sharp fall of Rs 1,800 before recovering on news of government reducing custom duty on gold and silver from 12.5 per cent to 7.5 per cent. “It is positive for consumers and is a step in the right direction as last year was worse in terms of gold import (higher prices along with pandemic had destroyed gold demand). This move will revive physical gold demand along with clamping down illegal gold importing operations,” Patel said.
The duty was reduced on other precious metals including gold dore bar, silver dore bar, platinum, palladium, gold/silver findings, and waste and scrap of precious metals, spent catalyst or ash containing precious metals and precious metal coins. Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, told Financial Express Online that cut in import duty is a good step towards encouraging more customers. “In 2020 due to sky rocket high prices, India did not buy jewellery. Now, reduced prices will encourage buying,” he said.