Budget Impact - Gold - Outside View by Chirag Mehta

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Budget Impact - Gold
Feb 28, 2011

Customs Duty on Gold remains unchanged

We would like to thank the finance minister for not increasing the customs duty on gold. From the Finance Minister's last two budget speeches and the rationale provided for increasing customs duty on gold during that period, it looked increasingly likely that the customs duty would be raised this time again.

But, the Finance Minister has left the customs duty on gold unchanged. Customs duty on gold is a pass through cost and keeping it unchanged has protected consumers /investors from further increase in prices.

We would have hoped for more measures taken towards development of the gold market for making India the gold trading capital of the world. This could have been done by allowing exports of gold in atleast some restricted manner. But, we reckon that this would be a gradual process and therefore highly appreciate the measure of keeping the customs duty unchanged and not increasing as anticipated.

We note that some of the markets had anticipated the increase in customs duty and had priced in the premium to a certain extent which is now seen reversing.

Branded Jewellery may get more expensive

Central Excise duty of 1 per cent is being imposed in case of jewellery and articles of gold, silver and precious metals, the levy would apply only to goods sold under a brand name. This would increase the cost for buyers of branded jewellery if the same is being completely passed on by the branded jewellery units. Such articles are being sold at a premium; this can increase the cost even further.

We hope that such measures lead to realization that such forms of buying gold for investments are inefficient from a pricing perspective. Investors should probably move towards more efficient products like Gold ETFs as far as investments in gold are concerned.

Chirag Mehta is Fund Manager, Commodities for Quantum Mutual Fund and manages the Quantum Gold Fund ETF and the Quantum Gold Savings Fund among others.

Disclaimer:

The views expressed in this Article are the personal views of the author Chirag Mehta and not views of Quantum Asset Management Company Private Limited(AMC), Quantum Trustee Company Private Limited (Trustee) and Quantum Mutual Fund (Fund). The AMC, Trustee and the Fund may or may not have the same view and DO not endorse this view.

Equitymaster requests your view! Post a comment on "Budget Impact - Gold". Click here!

1 Responses to "Budget Impact - Gold"

SUNIL DOKANIA

Mar 1, 2011

i want to know diffination of branded jewllery in the central excise.

Like (1)
  
Equitymaster requests your view! Post a comment on "Budget Impact - Gold". Click here!

More Views on News

Why Gold Hit Lower Circuit (Fast Profits Daily)

Jan 11, 2021

Were you shocked that bullion prices hit lower circuits on Friday on the MCX? Find out why it happened...

My Top 5 Gold ETFs (Fast Profits Daily)

Dec 28, 2020

In this video, I'll tell you my list of the top 5 gold ETFs in India.

Gold ETFs or Gold Bullion? (Fast Profits Daily)

Dec 14, 2020

Should you buy gold in physical form or in electronic form? Find out in this video.

Should You Buy Platinum or Gold or Silver Now? (Fast Profits Daily)

Aug 24, 2020

The precious metals market is booming but are all precious metals a buy? Find out in this video...

Warren Buffett is Bullish on Gold. Are you? (Fast Profits Daily)

Aug 18, 2020

Warren Buffett has bought a stake in a gold mining company. What does this mean for gold bulls?

More Views on News

Most Popular

My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)

Mar 31, 2021

A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.

My Stock Trading Strategy (Fast Profits Daily)

Mar 31, 2021

In this video I'll show you exactly how I go about picking stocks for trading.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS