Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Indian Gold Demand Up in September Even With Tax Rule

  by    0   0

After nearly tripling in August, demand for gold in India remained strong last month, despite a tax rule that put a damper on high-dollar jewelry purchases.

Gold demand rose 31% year-on-year in September. Imports came in at 48 tons, according to a Reuters report.

Higher purchases by India, the world’s second-biggest consumer, could lend support to global prices that are trading near their highest level in a week. The higher imports may also widen the South Asian country’s trade deficit.”

Continued strong demand in India was something of a surprise. It was fighting headwinds caused by a tax rule that went into effect back in August. The government included Indian jewelers under the Prevention of Money-Laundering Act. The rules increased compliance requirements for high-dollar jewelry purchases. Buyers had to provide their income tax identity for transactions above 50,000 rupees ($766). Analysts said the requirements were hindering high-value deals.

Last Friday, the Indian government announced it was rescinding the rule.

The Indian holiday of Dussehra fell on Sept. 30 this year. Last year, Indians celebrated the festival in October. The earlier date helped push gold demand forward into September. But even with the holiday falling earlier this year, the impact of the tax reporting rule was apparent. Although higher than last year, September demand was off the 2017 monthly average of 75 tons.

With the government lifting the tax rule, and another important holiday coming up, demand could pick up even more in October. All India Gems & Jewellery Trade Federation chair Nitin Khandelwal told the Economic Times that with the compliance rules now scrapped, he expects jewelry sales to pick up.

We will see the mid-sized, high-value purchases coming in now and sales will be better-than-expected during Diwali and the wedding season after that.”

August’s strong demand came despite a tax increase that went into effect this summer. On July 1, the Indian government replaced a labyrinth of taxes with a nationwide 3% Goods & Services Tax (GST).  The World Gold Council called it the “biggest fiscal reform since India’s liberalization in the early 1990s.” The WGC said the new tax structure would ultimately increase demand for gold in India, but analysts braced for a short-term dip in imports as the tax went into effect and the market adjusted to the new system.

Gold demand in India has rebounded this year after a tough 2016. A number of factors pushed demand down last year, including a jeweler strike. But by June of this year, the country’s gold imports had already topped 2016 numbers.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Gold Serving as a Lifeline for Indians During Credit Crunch

Gold has become a lifeline for Indians in the midst of a severe credit crunch. When the state-run lender refused to extend Babasaheb Mandlik credit, he used his wife’s gold jewelry as collateral for a loan in order to buy cotton seeds before the summer sowing season window closed.

READ MORE →

Uncle Sam Is Spending Like We’re In Recession; What Happens When We Really Are?

Last week we got the updated federal budget deficit numbers. At $867 billion, the 2019 fiscal year budget shortfall has already eclipsed last year’s deficit of $779 billion. The out of control spending and spiraling deficits are concerning enough on their own terms, but they become absolutely horrifying when you consider that these budget shortfalls […]

READ MORE →

Yield Curve Inverts Flashing Recession Warning; Stocks Plunge

The yield on the 10-year Treasury fell below the yield on the 2-year for the first time in 12 years, stoking recession fears and tanking stock markets. Yield curve inversions have preceded all nine recessions since 1955.  This was the first time the 10-year Treasury yield has dropped below the 2-year yield since June 2007 […]

READ MORE →

China Adds 10 More Tons of Gold to Its Hoard

the country of china shown on a globeChina bought gold for the eighth straight month in July, adding another 10 tons to its rapidly growing hoard. The recent purchases boosted the People’s Bank of China’s gold reserves to 62.26 million ounces – about 1, 945 tons.  China has added about 94 tons of gold to its stash over the past eight months.

READ MORE →

The Fed Has the US Economy on Life Support

The Federal Reserve has the US economy on monetary life support and Daily Reckoning managing editor Brian Maher says it will never again breathe on its own. As hedge fund manager Kyle Bass put it, the economy is trapped within the inescapable tractor beam of zero percent interest rates.

READ MORE →

Comments are closed.

Call Now