All that glitters, at least right now, is not gold prices. But, as the golden saying goes, one’s loss is another one’s gain, and it applies true to this yellow fellow!
The direct impact of Finance Minister Nirmala Sitharaman’s surprise cut of customs duty on gold, silver and other precious gems and jewellery has been on the streets. Prices have crashed by around Rs 4,000 in the few hours since the budget proposal was made in parliament.
Modi government’s budget proposal includes a surprise slashing of import customs duty on gold — duty on gold bar has been slashed from 15% to 6%, while that on gold dore has come down from 14.35 to 5.35%.
Similarly, silver also comes down from 15% duty to just 6% while precious metals like platinum, palladium, osmium, ruthenium, and iridium have been cut down from 15.4 to 6.4%. Revenue secretary Sanjay Malhotra later clarified that a special harbour rate will also be provided for diamonds from foreign mining companies.
Gold prices had peaked at as high as above Rs 76,000 for 10 grams of 24k gold the past weekend. However, rates as per the domestic market in Bhopal post the union budget announced showed gold trading at just above 71,000 rupees.
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Now, if you thought Nirmala did it taking into account the average Indian’s penchant for gold, think again. As Malhotra clarified at the post-budget press briefing on Tuesday evening, the decision was taken considering India’s growing importance as a business and processing hub for precious stones and metals.
“We have 50 lakh Indians employed in this sector,” the revenue secretary said, “Keeping this in mind, we have cut the import duty in this area so that people can get it more.”
South India is a major consumer of gold as well as a centre of jewellery business, while places like Gujarat have evolved into a global hub for the cutting and polishing of precious stones. The diamond trading provision, suggested to the minister by the Gems and Jewellery Export Promotion Council in the run-up to the budget, envisages India turning into a trading hub for diamonds and such, like Antwerp in Belgium.
“While gold smuggling and keeping unaccounted gold at home may come down, our main reason was to increase employment,” quipped Malhotra.
And if you’re miffed that your investments in gold may have taken a hit as of today, think of the bright side — today’s decision and the drop in prices actually make it more affordable to invest more in it!