X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
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

Sorry! There are no related views on news for this company/sector.

Most Popular

How to Avoid a 90% Loss Suffered by This Super Investor(The 5 Minute Wrapup)

Jul 12, 2018

Blindly following super investors is a dangerous game to play. Here's how you can avoid such mistakes.

The Answer to Your Wealth Worries: Small Caps (Especially Now)(Profit Hunter)

Jul 10, 2018

If you're worried about the markets - you are on the wrong track. This is opportunity - put your wealth-building hat on, instead - Richa shows you how...

The Multiple Problems with the Minimum Support Price (MSP) System(Vivek Kaul's Diary)

Jul 11, 2018

The price signals that MSP sends out, creates its own set of problems.

ICICI Pru Mutual Fund Tarakki Karega! - The Unethical Way?(Outside View)

Jul 11, 2018

PersonalFN explains how ICICI Prudential Mutual Fund flouted the norms of related party transactions while subscribing to the IPO of ICICI Securities.

PPF v/s Mutual Funds: Which Is Better?(Outside View)

Jul 10, 2018

PersonalFN highlights the key points of distinction between PPF and mutual funds.

More

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS