InvestorQ : Is it true that the government is cutting the customs duty on gold imports? Will that make gold cheaper?
Mitali Bhutta made post

Is it true that the government is cutting the customs duty on gold imports? Will that make gold cheaper?

Answer
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4 months ago
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If you recollect, the Finance Minister Nirmala Sitharaman had promised in the Union Budget that gold duties would be rationalized and communicated separately. This was necessitated because India was a major importer of gold and these duties were adding substantially to the prices of gold in the domestic market.

Now the Finance Minister lived up to the promise and actually rationalised customs duty on gold and silver. It may be recollected that some time back the government had hiked the import duty on gold from 10% to 12.5%. Now the government has gone ahead and reversed that duty hike and a lot more.

The base rate of customs duty on gold and silver has been aggressively slashed effectively immediately from 12.5% to 7.5%. The reduction in customs duty for gold and silver will certainly result in cheaper prices for the precious metals. Of course, there is a cess still applicable, so the net cost will be around 10.75% after cess and applicable social welfare surcharge.

However, this would still be substantially lower than the effective rate that India is currently paying to import gold into India. India remains one of the largest buyers of gold and this cut will make gold cheaper and give a demand boost. Gold reacted positively to the news. This is likely to make gold prices trend lower and also affordable, which has been the complaint of many people for whom gold is staple diet.

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