India raises taxes on Gold for the first time in six years

New Delhi (July 5)  India, the world’s biggest consumer of gold after China, increased the import tax on the precious metal for the first time since 2013, spurring domestic prices to a record. Shares of jewelers slumped.

The import tax on gold and other precious metals will be raised to 12.5% from 10%, Finance minister Nirmala Sitharaman said while presenting the federal budget for the year through March 31, 2020. India, which imports almost all of its gold, raised the tax thrice in 2013 to control a record current-account deficit.

India’s consumption of gold has been affected by the government’s efforts to curb its trade deficit and measures to discourage investors who used the metal to evade taxes. The high duties have spurred a spate of smuggling, including attempts to bring in bullion via planes and trains. Domestic prices have tracked a surge in overseas spot gold and further increases would imperil demand during the festival and peak wedding season running from August to December.

TheIndianExpress