Government cuts import duty on gold, silver

Gold in the national capital on Monday tumbled Rs 1,324 to Rs 47,520 per 10 gram on a day when the government announced cut in import duty on gold and silver, according to HDFC Securities.

The budget also reduced gold and silver dore bar customs duty from 11.85% to 6.9% and from 11% to 6.1%, respectively.

The duty was reduced on other precious metals including gold dore bar, silver dore bar, platinum, gold/silver findings, and precious metal coins.

Gold prices plunged over Rs 2,100 on Monday after the Union Finance Minister Nirmala Sitharaman announced the changes in customs duty rate for precious metals.

Shares of jewellery maker Titan Company rallied over 6 percent reacting to the Budget 2021-2022 proposal to cut import duty on import of gold and silver from 12.5 percent now. A top official of US Commodity Futures Trading Commission (CFTC) on Monday said the agency is "closely monitoring" recent activity in silver markets, as volatility in equity markets spilled into trading of the precious metal.

While gold and silver will attract agriculture infrastructure and development cess at the rate of 2.5 per cent and social welfare surcharge of 10 per cent.

"This will help the gem and jewellery exports to become globally competitive and move to the next level". "It is positive for consumers and is a step in the right direction as a year ago was worse in terms of gold import (higher prices along with pandemic had destroyed gold demand)".

Gold imports, which have a bearing on the current account deficit, fell 27.20 % to United States dollars 16.8 billion during April-December 2020-21.

India is the largest importer of gold, which mainly caters to demand of the jewellery industry.

Gems and jewellery exports declined by about 40 % to about United States dollars 17 billion during the nine months of the current fiscal.