In her maiden speech, Finance Minister announced a slew of measures to steer the economy. One of the announcements made by the minister is increased duty on gold which will make the precious metal more expensive for citizens. "It is also proposed to increase custom duty on gold and other precious metals from 10% to 12.5%," she said during her speech.
Shares of gems and jewellery companies fell sharply into negative terrain on the Bombay Stock Exchange after the minister proposed a hike in import duty on gold. It must be mentioned that the All India Gem and Jewellery Domestic Council (GJC) would be disappointed by the announcement as they were expecting a reduction in import duty on gold as prices were steadily rising in the global circuit.
Gold and silver in most forms will see a duty hike from 10 per cent to 12.50 per cent. However, silver dore bar with silver content not exceeding 95 per cent which has an import duty of 8.50 per cent currently, will increase to 11 per cent, while gold dore bar with gold content not exceeding 95 per cent which has an import hike of 9.35 per cent, will increase to 11.85 per cent.
"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 would cause an additional burden on buyers. The existing import duty on gold is 10 percent which is now revised to 12.5 percent. In addition, gold prices attract GST of 3 percent. Hence the present total tax incidence on gold would be about 15.5 percent 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 two percent to Rs 34968 per ten grams. It made an intraday high of Rs 35100. Meanwhile, gold prices in the international market held steady at $1417 an ounce. Earlier, the industry bodies expected a duty cut as higher tax structure had an impact on sales," said Mr Hareesh V, Head of Commodity Research at Geojit Financial Services.
Apart from that she proposed an increment on Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.
She also spoke about a new series of coins. "New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees, easily identifiable to the visually impaired were released by the Honourable Prime Minister on 7th March, 2019. These new coins will be made available for public use shortly."