The recent reduction in customs duty and cess on gold and silver by the government has led to a decrease in prices, with gold becoming more affordable by over Rs 26,000 per 10 grams and silver by over Rs 7,500 per kilogram. Despite this price drop, there is a concern within the industry that the government may soon review and potentially increase the GST rates on these precious metals, resulting in higher effective tax rates once more.
The government’s decision to lower the basic customs duty on gold bars from 15% to 6% and reduce the Agriculture Infrastructure and Development Cess (AIDC) on the duty from 5% to 1% has contributed to this price adjustment. With the application of a 3% GST rate, the effective taxes on gold have now decreased to 9% from the previous 18.5%. Similarly, the effective tax rate on silver bars has also been reduced to 9%. As a result, gold prices have seen a drop of Rs 6,192 per 10 grams and silver prices by Rs 7,686 per kilogram.
Ajay Kedia, managing director of Kedia Commodities, mentioned that the industry’s persistent request to lower duties is expected to curb the increase in gold smuggling activities.
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