The post shares details about custom duty on gold in the 2024 budget, the reason behind the cut, its outcome, and the current behavior of the financial market.

Highlight

• On the 22^nd of July 2024, India’s Union Budget came out.

• The custom duty on gold has seen a reduction to 6 percent.

• Apart from gold, the custom duty on silver has also been reduced to 6 percent. On platinum, the duty is reduced to 6.4%.

• The decision will boost the market position of the precious metals industry.

Custom Duty on Gold: Here Is a Quick Outlook

People in India were waiting for the Union Budget 2024. It finally came out on July 22nd. Nirmala Sitharaman came forward to present the budget. It confirms that the custom duty on gold is now cut to 6%. The custom duty on platinum has been reduced to 6.4% and on silver also to 6%.

The Reason to Cut Duty

The step to trim down the custom duty on gold has been taken to enhance the domestic value addition.

As per the financial analysts, the move to reduce customs duty will lead to a decrease in the prices of metals like gold. Certainly, this will increase its demand.

In the past year, the customs duty on metals such as silver and gold was 15%. Out of this 15%, 10% was the basic customs duty. The remaining 5% was the cess related to AID (Agricultural Infrastructure Development).

The Outcome of Reduced Custom Duty on Gold

If we consider the outcome of reduced custom duty on gold, then it will increase the demand for this metal. Ultimately, it can increase the prices on a global level in the long run. The circumstances may lead to broadening the trade deficit. In the worst-case scenario, it will put more pressure on the already struggling rupee’s valuation.

There was a continuing demand to reduce the customs duty on precious metals such as platinum, silver, and gold.

One must note that only the basic customs duty has been reduced. The percentage of Agricultural Infrastructure Development Cess still remains the same at 5%. So, the basic customs duty has been dropped from 10% to 6%. Hence, the total custom duty on gold now equals 11% (6% + 5%). Earlier, it was 15%.

The Position of Commodity Market and Share Market

Once the decision was announced, many Gold stocks saw a surge in their valuation. Companies dealing in valuable metals witnessed a rise in their share prices. Some of them are as Senco Gold, Zaveri, PC Jewellers, Kalyan Jewellers, and Titan. Undoubtedly, the precious metals industry seems to be very happy with the decision.

Due to the announcement of reduced custom duty on gold, the price in MCX was seen to be lower by 2,000 Rs. It came to a final valuation of 70,350 Rs. The worth of silver came down by 2,500 Rs. reaching a valuation of 86,600 Rs.

Custom Duty on Gold Conclusion

The reason behind the cut on custom duty on gold is to enhance its domestic value addition. Not just the gold, but the custom duty on silver has also been reduced to 6 percent. People in India are crazy about gold-based investments. This is a very strong move on the part of the government and it is likely to increase the demand for precious metals. For more finance stories and news like and subscribe to Financereview.org.