New Delhi, Feb 1 Customs duty on silver has been increased from about 10.75 per cent to 15 per cent to bring it at par with duty on gold.
Finance Minister Nirmala Sitharaman said in her Budget speech for 2023-24: "Customs Duties on dore and bars of gold and platinum were increased earlier this fiscal. I now propose to increase the duties on articles made there from to enhance the duty differential. I also propose to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum."
Ghazal Jain, Fund Manager- Alternative Investments, Quantum AMC said in the precious metals space, custom duty on silver was increased from about 10.75 per cent to 15 per cent to bring it at par with duty on gold. Despite that, domestic silver prices saw an up move of only 1.5-2 per cent reflecting lower domestic demand for the metal.
Domestic gold prices were trading at a discount of close to 2 per cent for most of January. This was partly due to market anticipation of a reduction in custom duty on gold in Budget 2023-24.
But the Finance Minister Nirmala Sitharaman maintained the status quo with duty standing at 15 per cent plus GST. As a relief reaction, prices moved up by about 1 per cent as the discount evaporated. But while the short-term price distortions prevailing in the market may have been taken care of, the longer-term structural issue remains unaddressed, Jain said.
M.P. Ahammed, Chairman, Malabar Gold & Diamonds said the gems & jewellery industry is, however, disappointed with the budget not resorting to the reduction in import duty. The increase in the duty for silver is expected to push up the price of the precious metal. The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization.
Aditya Modak, Co-founder, Gargi by P N Gadgil & Sons said the gold import duty has remained the same, while they expected it to go down by 2.5 per cent. On the other hand, the import duty on silver has increased by 2.5 per cent, affecting the fashion jewellery market due to the price hike of sterling silver.
Modak said on the other hand, the reduction in surcharge on super-rich taxpayers will give positive sentiment to investments. Also, the increase in the Income Tax limit will increase the disposable surplus income of the middle class, which will be good for tourism, discretionary spending, and luxury FMCGs.
Colin Shah, MD, Kama Jewellery said the hike in basic customs duty on articles made from gold bars and import duty on silver will lead to a rise in the final price of locally made jewellery and maybe challenging for the local refineries.
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