Gold import duty raised from 7.5% to 12.5% in India

The rate hike acts as a reversal to the original rates

Here are the details

Background

Gold imports attract duty and GST

Originally, the duty was 12.5%

It had been reduced to 7.5% in last year's Union Budget

What has happened?

In a strange turn of events, import duty is back to 12.5%

This is an attempt to cut demand amid a depreciating rupee

This will lead to an increase in gold prices in India

Consequences

As mentioned, gold price is expected to shoot up over next few days

Demand for gold during festive season could be low

Reportedly, this might lead to spike in illegal imports due to arbitrage

Market in numbers

India imported 1,678 tonnes of gold in 2021

The value of imports were almost $35 billion last year

Total tax burden: 12.5% duty + 2.5% agri cess + 0.75% SW surcharge + 3% GST

Want to know about the gold loan market in India?

Here is an ultimate guide to the best banks for gold loans in 2022!