Govt doubles duty on precious metals; abolishes commodity transaction tax
The Indian gold futures jumped up further today with Rupee and the announcement that India will raise import taxes on gold. Also the elimination of the commodities transaction tax spurred the Indian commodities today.
Today, the domestic Gold futures opened up on a steady note and went up in a flash as the Indian rupee weakened sharply following a near 900 point intraday correction in the BSESENSEX, which gave up its early gains with the Union Budget 2009-10, which failed to live up to the expectations.
In its budget speech, India finance minister Mr. Pranab Mukharjee proposed a 100% hike in the customs duty for the gold and sliver bars. Currently, gold bars attract customs duty at the specific rate of Rs.100 per ten grams while other forms of gold (excluding jewellery) are chargeable to a duty of Rs.250 per ten grams. These rates were fixed in 2004 and have not been reviewed even as the price of gold has increased manifold.
The finance minister proposed to partially restore the incidence by increasing these rates to Rs.200 per ten grams and Rs.500 per ten grams respectively. Along the same lines, the customs duty on silver (excluding jewellery) will be increased from Rs.500 per kg to Rs.1,000 per kg. These revised rates would also apply to gold and silver, including ornaments that are not studded, when imported by a bona fide passenger as baggage.
On an immediate basis this spurred the sentiments on an immediate basis, as the landed cost of the domestic gold imports would rise in tune to the customs duties.
However, this may hurt the domestic Gold consumption sharply. India's gold imports for January-June fell 64% year-on-year to only around 50 tonnes, according to the latest estimates from the Bombay Bullion Association. The gold demand from India has been under severe stress since the start of the year as record high global prices and weak Indian rupee hurt the consumption pattern in the world's largest gold buyer. In this case, it will be interesting to see how does the impact of the hike in customs duties pans out on the domestic Gold spot and futures prices.
MCX Gold futures for August hit a high of Rs 14530 in a heightened spell of aggression post the Budget and consolidated above Rs 14500 levels. The counter currency trades at Rs 14500 only, up Rs 36 or 0.25% from the previous close with around 4% increase in the open interest.
An ounce of Gold on the COMEX division of the New York Mercantile Exchange is trading down $ 7.7 at $ 923.3 falling to as low as $920.5 earlier today. If the momentum continues the counter may test the $900 level.
Govt doubles duty on precious metals; abolishes commodity transaction tax
The Indian gold futures jumped up further today with Rupee and the announcement that India will raise import taxes on gold. Also the elimination of the commodities transaction tax spurred the Indian commodities today.
Today, the domestic Gold futures opened up on a steady note and went up in a flash as the Indian rupee weakened sharply following a near 900 point intraday correction in the BSESENSEX, which gave up its early gains with the Union Budget 2009-10, which failed to live up to the expectations.
In its budget speech, India finance minister Mr. Pranab Mukharjee proposed a 100% hike in the customs duty for the gold and sliver bars. Currently, gold bars attract customs duty at the specific rate of Rs.100 per ten grams while other forms of gold (excluding jewellery) are chargeable to a duty of Rs.250 per ten grams. These rates were fixed in 2004 and have not been reviewed even as the price of gold has increased manifold.
The finance minister proposed to partially restore the incidence by increasing these rates to Rs.200 per ten grams and Rs.500 per ten grams respectively. Along the same lines, the customs duty on silver (excluding jewellery) will be increased from Rs.500 per kg to Rs.1,000 per kg. These revised rates would also apply to gold and silver, including ornaments that are not studded, when imported by a bona fide passenger as baggage.
On an immediate basis this spurred the sentiments on an immediate basis, as the landed cost of the domestic gold imports would rise in tune to the customs duties.
However, this may hurt the domestic Gold consumption sharply. India's gold imports for January-June fell 64% year-on-year to only around 50 tonnes, according to the latest estimates from the Bombay Bullion Association. The gold demand from India has been under severe stress since the start of the year as record high global prices and weak Indian rupee hurt the consumption pattern in the world's largest gold buyer. In this case, it will be interesting to see how does the impact of the hike in customs duties pans out on the domestic Gold spot and futures prices.
MCX Gold futures for August hit a high of Rs 14530 in a heightened spell of aggression post the Budget and consolidated above Rs 14500 levels. The counter currency trades at Rs 14500 only, up Rs 36 or 0.25% from the previous close with around 4% increase in the open interest.
An ounce of Gold on the COMEX division of the New York Mercantile Exchange is trading down $ 7.7 at $ 923.3 falling to as low as $920.5 earlier today. If the momentum continues the counter may test the $900 level.
