: Gold prices to go up as import duty raised to 12.5% from 7.5% #IndiaNEWS #Business Hyderabad: Be prepared to see the gold prices going up sharply. The Central government has increased the basic import

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Gold prices to go up as import duty raised to 12.5% from 7.5% #IndiaNEWS #Business
Hyderabad: Be prepared to see the gold prices going up sharply. The Central government has increased the basic import tax on gold by 5% to 12.5% from the earlier 7.5%. With the 2.5% agri cess, the effective duty on gold will be 15%.
However, the social welfare surcharge of 0.75% levied earlier is now exempted. So, the net duty change will be in 4.25% taking the total duty on gold to 15% from the earlier 10.75%
The import duty on gold is increased in an attempt to stem the decline in rupee and curb the widening trade deficit, which has soared to record highs of .33 billion in May amid rising import bills. In all, the net duty change is 4.25%. Gold also attracts additional 3% GST as well, which means the total levies on gold will be 18.45%.
India largely imports gold to meet domestic demand. This increase in the import duty is likely to lead to a proportionate rise in the price of domestic gold by around Rs 2000 per 10gm, factoring in the international gold prices which are trading with a slightly negative bias, said Sugandha Sachdeva, VP- Commodity and Currency Research, Religare Broking.
Imports of gold, which is a non-essential commodity, rose by 677% from a year ago to .83 billion, the highest level in a year. Gold demand has seen a strong pick up amid a decline in prices, where they are seen consolidating around Rs 50000/10gm mark, Sachdeva said.
Total imports jumped by around 56% in May (YoY) amid surging costs of energy products. Crude prices which have risen by around 50% this year amid the supply squeeze caused by the Russia-Ukraine war. This resulted in the current account deficit (shortfall between the money received by selling products to other countries and the money spent to buy goods and services from other nations) widening and putting pressure on the Indian rupee, which slumped to record lows of 79.13 mark.
India had imported the most amount of gold in a decade last year, as demand revived after the pandemic. There has been a sudden surge in imports of gold. In May, a total of 107 tonne gold was imported as compared to 11 tonnes same period last year. The surge in gold imports is putting pressure on the current account deficit, said Naveen Mathur, Director Commodities and Currencies, Anand Rathi Shares and Stock Brokers.
Key points
Base Duty changed from 7.5% to 12.5%.
Social welfare surcharge of 0.75% has been exempted.
Older Rate was was near 10.75% including social welfare surcharge of 0.75% and 2.5% agriculture cess
Current levies stands at 15% (12.5% base duty plus 2.5% agri cess)
Gold attracts 3% GST

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