Union Finance Minister Nirmala Sitharaman announced significant changes to import duties on gold and silver in the Union Budget 2024-25 yesterday. Following the announcement, the gold prices had slumped significantly but have started recovering.
Check how the changes to import duties on gold and silver in the Union Budget have impacted their market prices.
Union Finance Minister Nirmala Sitharaman announced significant changes to import duties on gold and silver in the Union Budget 2024-25 yesterday. Following the announcement, the gold prices had slumped significantly but have started recovering.
As per the latest data from the World Gold Council spot gold price, the rate of 22-carat gold is currently observed at Rs 6,510 per gram, marking a noticeable increase since the fall induced by the Budget session. The current price is down by Rs 367 per gram compared to the gold price before the Budget. The rate of 22-carat gold had gone down to 6477 per gram, a decrease of Rs 397 per gram.
In her budget speech, Finance Minister Nirmala Sitharaman proposed reducing the customs duties on gold and silver to 6 per cent, aiming to enhance domestic value addition in the production of gold and precious metal jewellery. "To enhance domestic value addition in gold and precious metal jewellery, I propose to reduce customs duties on gold and silver to 6 per cent and that of platinum to 6.4 per cent," Nirmala Sitharaman said. The customs duty was cut to 5.35 per cent from 14.35 per cent for gold and silver ore.
"My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation while keeping the interest of the general public and consumers surmount," Sitharaman said.
The cut in gold import duty will promote the manufacturing of gold and silver jewellery and will prevent smuggling, according to Union Commerce and Industry Minister Piyush Goyal who added that as the economy is now in good shape, and with strong foreign exchange reserves, the decision to reduce the import duty is timely to reduce the price disparity between domestic and international markets.
Hareesh V, the Head of Commodities at Geojit Financial Services, expressed his views on the revised custom duty rates. "Customs duty on gold and silver has been reduced to 6 per cent, which may lead to a decline in domestic prices and perhaps lift demand. The existing duty on gold and silver is 15 per cent which comprises 10 per cent of basic customs duty and 5 per cent as Agricultural Infrastructure Development cess," he said. So now the total import duty on gold and silver is reduced to 11 per cent. Lower prices could drive higher consumer demand and increased demand would lead to higher sales volumes, ultimately benefiting companies dealing in gold.
So the total import duty on gold and silver has been reduced to 11 per cent, which can increase demand and sales volume. This has led to positive industry feedback and a 14 per cent increase in shares of gold and jewellery retailers.
Moreover, the decision to lower the long-term capital gains tax rates for assets like gold and property from 20 per cent to 12.5 per cent is also significant. However, the indexation benefits have been removed.