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

Reversal of Tax Rule Could Boost Gold Demand in India

  by    0   0

The Indian government has reversed a tax rule that was putting a damper on gold demand in the country.

The government included Indian jewelers under the Prevention of Money-Laundering Act last August. 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). According to the Economic Times, the requirements were hindering high-value deals.
The reversal of the rules comes just before a peak season for gold demand in India. Many Indians buy gold leading up to the Hindu festival of Diwali, which falls on Oct. 19 this year.  Shares of jewelers increased by as much as 8% with the announcement.

The government rescinded the rules on jewelry purchases along with a number of other tax provisions, according to the ET.

India also slashed tax rates on 27 items, and extended the period for small businesses to file returns, in a bid to reverse the blow to growth stemming from a chaotic roll out of the nationwide sales tax.”

Analysts say the rollback of the purchase rules will be good for gold demand in India, the world’s second-largest consumer of the yellow metal. All India Gems & Jewellery Trade Federation chair Nitin Khandelwal told the Economic Times that with the compliance rules now scrapped, sales may pick up, providing relief for jewelers.

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.”

Industry analysts estimate gold imports into India fell 43% in September after the government implementation of the “know your customer” rules. The director of Senco Gold & Diamonds told the ET sales had fallen 30-50% over the past two months or so.

Now we can think of a recovery and back to close to last year’s sales. Big-ticket booking will start once the wedding jewelry buying starts, which is yet to happen.”

Indians have a love affair with gold. It’s not just a luxury. Even poor people buy gold in India. The yellow metal is interwoven into the country’s marriage ceremonies and cultural and religious rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these poorer rural areas, where the vast majority of people live outside the official tax system. According to the World Gold Council, Indian households hold over 22,500 tons of gold.

TaxFreeGold.Banner.1000x285

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

The Lurking Inflation Monster

Where’s the inflation? The Federal Reserve printed money for nearly a decade, and yet, inflation – as measured by the government – has been “muted.” What gives?

READ MORE →

Gold Set to Join the “All-Time Highs Club” — Bloomberg Intelligence

Gold is poised to join the “all-time-highs” club in the upcoming decade. No, this isn’t the musing of some gold-bug. It’s analysis from a pretty mainstream source — Bloomberg Intelligence. Stocks have set new records over the last several weeks and the dollar hit 2-year highs this fall. But writing in the commodity outlook, Bloomberg […]

READ MORE →

Recession Early Warning? Spending By the Wealthy Is Slowing

America’s economy is built on consumption. Average Americans have been pushing the US economy along, spending money they don’t have. But as we’ve reported, there are signals that the credit cards might be close to maxed out. Now there appears to be another warning sign – the wealthy are reining in their spending.

READ MORE →

Poland Brings Gold Home; Calls It a Symbol of Strength

Poland has repatriated 100 tons of gold from England. National Bank of Poland Governor Adam Glapiński announced the yellow metal’s return home on Monday. “The gold symbolizes the strength of the country,” Glapiński told reporters.

READ MORE →

Is the Auto Loan Bubble Nearing Its Popping Point?

a check engine light is onHow much more can the auto loan bubble blow up before it pops? Total auto loans and leases outstanding for new and used vehicles increased by another 4.3% year-on-year in the third quarter, according to the latest data from the Federal Reserve. This was a factor in pushing total American consumer debt to a new […]

READ MORE →

Comments are closed.

Call Now