Finance Minister Nirmala Sitharaman announced a significant reduction in customs duties on gold and silver while presenting the Budget on Tuesday.
This lowering has resulted in a substantial drop in prices, which benefits consumers and boosts market demand. However, broader market conditions and geopolitical conflicts may impact future trends.
Import duties on gold and silver reduced from 15% to 6%
The Finance Minister has decreased import duties on gold and silver from 15% to 6%. This includes reducing the Basic Customs Duty (BCD) from 10% to 5% and the Agricultural Infrastructure Development Cess (AIDC) from 5% to 1%.
Hareesh V, Head of Commodities at Geojit Financial Services, stated, “The drop in customs tax from 15% to 6% may result in lower local prices and possibly increased demand. Previously, the duty was 10% BCD and 5% AIDC.
Gold prices on MCX dropped by Rs 4,000 per 10 grams
Following the statement, gold prices on the Multi Commodity Exchange (MCX) plummeted to Rs 68,500 per 10 grams from Rs 72,838, a Rs 4,000 reduction. In the foreign market, gold prices were hovering around $2,397.13 per ounce, indicating a similar trend.
Silver prices on the MCX also saw a significant decrease, falling to Rs 84,275 per kg from Rs 88,995.
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Mahendra Luniya, Chairman of Vighnaharta Gold Ltd., emphasized the immediate impact of the duty reduction.
He stated, “The drop in customs tax has swiftly impacted the market. While this is a positive development for investors, geopolitical issues, such as acts by China, may still have an impact on gold prices. For consumers, the price decline makes this an excellent time to invest, particularly in digital options such as Sovereign Gold Bonds, which have lower costs and pay 2.5% annual return.”
Overall, the reduced customs charge is projected to benefit both consumers and the bullion industry. It may increase consumer spending and meet market demands, even as larger economic and geopolitical issues continue to influence market circumstances.
