01 Feb , 2023 By : Monika Singh
Gold prices rose over 1% as FM Sitharaman announced that the basic customs duty on articles and items made from gold bars will be hiked in the Union Budget 2023. The Finance Minister also added that conversion of gold to e-gold would not be liable for any capital gains. On the back of this news,gold futures touched Rs 57785 per ten grams, rising Rs 595.00 or 1.04%.
On the customs duties, FM Sitharaman said, “Customs Duties on dore and bars of gold and platinum were increased earlier this fiscal. I now propose to increase the duties on articles made therefrom to enhance the duty differential. I also propose to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum.”
“Custom duty on bars of gold were earlier increased in July 2022 and now to enhance the duty differential, FM had proposed to increase the duty on articles made from thereof. To curtail demand and narrow the current account deficit, the government has made this move. The hike in finished goods came as a surprise as participants were expecting either status quo or decline in import duty. The reason behind this would be rupee weakness and rise in gold prices at international level,” said Bhavik Patel, Commodity and Currency analyst, Tradebull Securities.
“The hike in basic customs duty on articles made from gold bars and import duty on silver will lead to a rise in the final price of locally made jewelry and maybe challenging for the local refineries,” stated Colin Shah, MD, Kama Jewelry.
Gold to E-Gold Conversion
In a push to make the safe-haven asset easier to access and promote investments in the electronic equivalent of gold, the Budget 2023 proposed that “the conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains.” This move would increase the participation and investment in electronic gold, added Bhavik Patel.
“The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization. This announcement may help in reducing the import of gold,” said Colin Shah, MD, Kama Jewelry.
0 Comment