By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

There are two major announcements in this budget for the bullion industry, which is considered positive by the market participants.

• Reduction in Duty on Gold and Silver from 15% to 6%

	Basic Customs Duty (BCD)		Agriculture Infrastructure and Development Cess (AIDC)		Total Duty Structure		Net Change
	Old	New	Old	New	Old	New
Gold Bars	10%	5%	5.00%	1.00%	15.00%	6.00%	9% (Rs 5900/ 10 gm) lower
Gold Dore	10%	5%	4.35%	0.35%	14.35%	5.35%
Silver Bars	10%	5%	5.00%	1.00%	15.00%	6.00%	9% (Rs 7600 / kg) lower
Silver Dore	10%	5%	4.35%	0.35%	14.35%	5.35%
Platinum	10%	5%	5.40%	1.40%	15.40%	6.40%	9% lower

 

After this announcement, domestic gold and silver prices are available cheaper by almost Rs 6000/10 gm and Rs 8000/kg respectively in a single day. Duty cuts and in turn, discounted prices will induce more physical buying and higher imports of Gold and Silver in India going ahead.

• Changes in capital gain tax rate in holding and selling gold in physical or digital form

	Short-term Gain Tax	Long-term Gain Tax
Old	less than 3 years – As per Income tax slab	Greater than 3 years – 20% Tax
New	Less than 2 years – 20%	Greater than 2 years – 12.5% Tax

 

Previously, indexation for inflation was permitted when calculating long-term capital gains from the sale of gold and gold jewellery. Indexation allowed the seller to decrease taxable capital gains by inflating the purchase cost based on the notified cost inflation index. Indexation benefits have been abolished from this budget. Also, the exemption limit on capital gains is hiked from Rs 1 lakh to Rs 1.25 lakh per year now.

Overall, these two steps are welcomed by the bullion industry. Jewellers, dealers, Consumers, etc all are very happy with lower gold prices and taxes.

 

 

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