The total gold prices plunged after Finance Minister Nirmala Sitharaman also proposed to cut import duty on this gold while presenting this Union Budget 2021 on Monday. On The other hand, all the shares of jewellers surged.
Nirmala Sithraman proposed to cut the duty on gold as well as silver to 7.5 percent from 12.5 percent, meeting the industry demand. However, she also proposed the Agriculture infrastructure as well as development cess at the rate of 2.5%.
The gold futures pared morning gains and was trading at Rs 47,939 per 10 gram, down very nearly Rs 1,800 from Monday’s very high. This was down by 2.83 percent from the previous close.
With this announcement, shares of the companies involved in the trade of precious metals soared. Titan was up by 5 percent to Rs 1,491, while PC Jeweller, as well as Vaibhav Global, were up by 6 and 7 percent, respectively. Some other jewellers and gemstone traders also rose in tandem.
The whole of the industry was demanding a reduction in import duty on this gold and goods and services tax to 7 percent to curb very large-scale gold smuggling in the whole country, boost the gold trade, as well as to strengthen demand for the gold jewellery in the market.
Presently, gold attracts 12.5 percent of the import duty, which was raised by 250 basis points in 2019. Besides, the government also levies 3 percent of the GST, and the total duty and GST implication work out at 15.5 percent.
The cut in import duty has been a very long-standing demand from all the industry that believes the very high taxes result in smuggling as well as tax evasion.
In the last year, the total gold, as well as silver prices, have shot up significantly, thanks to safe-haven buying by all the investors in the market.
The industry was also demanding a reduction in import duty on this gold and the GST to 7 percent to curb a very large scale.