gold import charge increased by 5 percent will gold rate increase

While the duty of 7.5 percent was levied on gold imported into India, the central government has issued an ordinance to raise it to 12 percent. A notification to this effect was published in the Gazette on 30th June.

The country’s trade deficit rose to an all-time high, hitting a new high last June. As a result, the rupee depreciated against the dollar. In this context, gold import duty has been increased.

In an interview to News 18 media, Pavik Patel, a senior researcher related to the commodity or currency, said, “The import duty on gold has been increased to compensate for two things. First, this decision has been taken to offset the reduction in tax on petroleum products and secondly to address the current account deficit,” he said.

Why is the government increasing the import duty?

India’s trade deficit widened from $6.53 billion to $24.29 billion in a single year. In response to this widening deficit, the rupee has been depreciating against the dollar. It hit a new high of Rs 79.12 last Friday.

India is the second largest importer of gold

India is the second largest buyer of gold in the world after China. Most of the country’s gold requirements are met through imports. Compared to May last year, gold imports in May this year increased 9 times to $7.7 billion.

The central government has raised its import duty to curb gold imports amid a widening trade deficit and a depreciating rupee.

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With the current tax hike, the total tax levied on gold will be 18.75 percent. The total import duty will be 15.75 percent. 12.50 percent of which is the basic import duty. 2.5 percent agricultural cess and 0.75 percent social welfare tax. Apart from this, 3% GST is levied on the sale of gold.

Experts say that the price of 10 grams of gold may increase up to Rs.2,000 when the national demand and import duty are calculated.

What is the position of investors?

As far as investors are concerned, gold will become an expensive commodity in the domestic market. In line with the current Multi Commodity Exchange gold price, the gold price in the market has increased.

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