Hareesh V, Head, Commodity Research at Geojit Financial Services said, "The proposal to increase the custom duty on gold and precious metals will certainly lift gold prices in the country. Since the domestic prices are already at multi-year highs due to a weak rupee and higher international prices, the new decision to revise the import duty on gold to 12.5% from the current 10% would cause an additional burden on buyers. In addition, gold prices attract GST of 3%. Hence the present total tax incidence on gold would be about 15.5% this will lead to higher prices for gold in the country”.
After the budget proposal, the most active August Gold Futures in MCX platform increased by more than 2% to Rs 34,968 per 10 grams. It made an intra-day high of Rs 35,100. Meanwhile, gold prices in the international market held steady at $1417 an ounce. Earlier, industry bodies expected a duty cut as higher tax structure had an impact on sales, he said.