Union Budget 2019: The government is unlikely to cut import duty on gold as it wouldn’t like to take any step which would disturb its revenue stream. The industry has demanded a reduction in import duty to the tune of 4 per cent from the current rate of 10 per cent.
Union Budget 2019-20: The government is unlikely to cut import duty on gold as it wouldn’t like to take any step which would disturb its revenue stream. The industry has demanded a reduction in import duty to the tune of 4 per cent from the current rate of 10 per cent. According to experts, the current account deficit may widen again if the government fiddles with the import duty. In 2018-19, the trade deficit had narrowed down to 2.5 per cent of gross domestic product or GDP. Experts expect gold to trade with a positive bias on the budget day in view of trade tensions between the US and China, geopolitical tensions in the Middle East and uncertainty in the equity markets which tend to support the gold prices.
“Though the country’s trade deficit has narrowed down to 2.5 per cent of GDP in 2019, the GST revenue is less than Rs 12 lakh crore in 2018-19, so the government wouldn’t like to take a risk by cutting the import duty. The gold smuggling has also risen in the last six month and the government must take steps to curb that,” Ajay Kedia, Director with Kedia Commodities told Financial Express online.
The gold is selling at a discounted price in India after the prices hit an all-time high last week. While the international factors are supporting the gold prices, the domestic factors don’t seem to help the gold prices owing to the delayed monsoon, time for the arrival of the festive season and high prices. According to Navneet Damani, Vice President, Commodity & Currency Research, Motilal Oswal Financial Services, the government doesn’t have enough leeway to provide import duty cut as its revenue kitty will get adversely impacted.
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“Gold has given a breakout above $1365 an ounce, a clear close above the same could lead to a sustained up move towards $1435-1440an ounce followed by $1470 an ounce. Domestic gold prices are also holding firm above the break out levels of Rs 33400 per 10 gram and this could trigger further upside in price towards Rs.34400 followed by Rs.35100 in the short term. We continue to maintain our medium-term target for gold at Rs.38000 and Rs.40000,” Navneet Damani, Vice President, Commodity & Currency Research, Motilal Oswal Financial Services Limited told Financial Express Online.
Gold prices on Thursday fell by 0.04 per cent to Rs 34,231 per 10 gram in futures trade. On the Multi Commodity Exchange, gold contracts for July delivery dipped by Rs 15, or 0.04 per cent, to Rs 34,231 per 10 gram in a business turnover of 17,059 lots. Globally, the yellow metal traded 0.30 per cent lower at USD 1,416.70 an ounce in New York.