- On 6th July, India’s gold import duty increased from 10% to 12.5% as part of a revenue-raising budget
- We believe it will have a negligible long-term effect on gold demand
- We think it may be a temporary measure: when the government’s books are in better shape we may see some of these tax increases rolled back
- The market will be supported by other government initiatives, including the structural reforms such as the India Gold Spot Exchange and plans to boost rural incomes
On the 5th July during the annual budget, India’s Finance Minister, Ms. Nirmala Sitharaman, increased the custom duty on both gold bar and gold doré by an additional 2.5%. This was implemented on the 6th July. The custom duties on gold bar and gold doré now stand at 12.5% and 11.85% respectively.1 With an additional 3% GST, consumers will be now paying 15.5% tax for refined gold (Chart 1).2
This came as quite a surprise to the industry. In the past year the gold trade has been working collaboratively with government officials to improve the degree of transparency in the industry.