Reducing the duty on gold will not only make it cheaper for the common customers, but will also benefit the gold jewelery sector. Jewelers believe that this decision of the government will increase the demand for gold. However, this will not increase the price. Gold and silver prices will come down due to duty cuts.
In the Budget 2021-22, Finance Minister Nirmala Sitharaman has announced to reduce the duty on gold and silver from 12.5 percent to 7.5 percent. Due to this, the demand for gold and silver in the country has increased. Jewelers believe that this decision of the government will increase the demand for gold. However, this will not increase the price. Gold and silver prices will come down due to duty cuts.
Gold smuggling will also be banned
Companies and jewelers running gold stores believe that smuggling of gold had increased considerably due to high duty rates. Also, illegal transactions were taking place. The government was losing revenue due to this. With the reduction of duty on gold, now there will be transparency in its business and the government will not have a revenue deficit. A drop in the price of gold will be recorded.
Consumption will increase due to being cheaper
Due to being cheaper, consumption of gold and silver in the country will also increase. Every 800 to 850 tonnes of gold are imported into India. It is estimated that 100 to 120 tons of gold is brought through the gray market in the country. Analysts say that the reduction in duty on gold will also benefit gold jewelery exports. Employment will also increase due to intensification of work in gold jewelery units.
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