Budget 2012 - Gold Price May rise Up to Rs.500 per Sovereign
Friday when finance minister Pranab Mukherjee hiked duty on gold imports from 2 to 4% with 1% excise duty to be levied on 30% of the invoice value for all forms of jewellery.
Industry insiders felt that the Centres move, which is largely motivated by the increasing forex outflows on gold bullion purchases, would have a negative impact on prices, though jewellery demand may not be unduly affected. Sources said that per sovereign (8 gm) prices could rise as much as 500.
"We will have to pass on the increase to customers. Gold prices have been high enough as it is and only the demand has kept this going. Going ahead, the middle class and people in rural areas who rely on gold as a solid and safe investment will be hit when TCS (Tax Collection at Source) rates on gold purchases above 2 lakh," said Kalyanaraman, managing director, Kalyan Jewellery.
Both gold and platinum will become more expensive. The Budget has increased basic customs duty on standard gold bars and gold coins of purity exceeding 99.5% and platinum from 2 to 4% and on non-standard gold from 5 to 10%.