Government raises import duty on gold by 5%, now gold prices will rise sharply; Know

The government has increased the import tax to curb rising gold imports to India and the depreciation of the rupee. According to the report, the government has increased the gold import tax by 5%.

According to a notification issued by the government, 12.5% tax will now be levied on gold imports. The government currently levies a 7.5% tax on imported gold.

Will gold be expensive?

Rising import duties will now make gold more expensive in India and the decision taken ahead of the festive season will hamper demand. Gold investment craze will also decrease.

The government, in support of the RBI, has decided to raise the import tax to curb the unilateral depreciation of the rupee. Apart from this, the import duty on gold jewelery and warp has also been increased to 15%.

India, the world’s second-largest gold consumer, has taken steps to curb imports as trade deficits and fiscal deficits widen due to higher average imports.

The country’s trade deficit reached a record 24.29 billion in May. India imported 0 6.03 billion worth of gold in May, nine times more than a year ago.

India imported the most gold in a decade last year as demand improved after the Koro epidemic. Raising import duties on goods could be a way to curb imports by making gold more expensive. This is in stark contrast to the government’s import duty on gold last year, where the central government cut taxes to 7.5 per cent in the budget.

Interestingly, earlier this year, the country’s leading jewelers demanded that the government reduce the import duty on gold from 7.5 per cent to four per cent in Budget 2022 to reduce gold smuggling.

On the other hand, countries like China, US and Singapore have lifted import duties on gold to strengthen the domestic market.