How GST and Demonetization Impacts The Gold Prices?
GST stands for Goods and Service tax is a new taxation revolution in India introduced by the Government of India. This tax reform would replace several taxes like Value Added Tax VAT, Central Excise Duty, and other such taxes. Every business must go for online GST registration, which is simple and easy. The new GST scheme had changed the price of various products in the market. Gold is one among the product that experience change in price after the GST taxation scheme.
Impact Of GST On Gold Price
The price of gold a precious metal has indeed changed due to the latest GST reforms. There were indeed fluctuations in the rate of gold after adapting to the GST regime. The GST rate for gold was 3% and 8% for making charges. There were several concerns about the tax for making charges, and thus it was reduced to 5%. The price of gold seems to increase in spite of the unstable gold market. The overall price of this precious metal has increased due to its import duty. Thus the GST scheme has increased the rate of purchase of gold of 3% of GST and making a charge of gold is 5% of GST. Here you check out the latest impacts of gst on gold.
After GST the prices of gold is steadily increasing due to the demand in the international market. The decline in the dollar rates has made an increase in the volume of trade of this precious metal.
It is said that in the long run, the GST reforms would create a positive effect on the gold market. Though people are not happy with the increase in gold price after GST, the jewelry industry is content with the GST scheme.
Thus after the GST taxation scheme gold would be taxed with 3% GST. This increase in the gold rate would be borne by the customers who purchase gold. Before the GST reform, there was no tax imposed for the making charges, and after the adoption of the GST scheme, a tax rate of 5% is levied for the making charge of gold jewellery. The council and jewellery bodies are confident that the increase in the gold price can make the gold manufacturing market transparent.
Before the adoption of GST rates, the tax rates for gold was only 2%, and it was increased to 3% after the GST reforms. This is only a marginal increase, but the tax levied on the making charges, which is 5% GST seems to increase the price of gold. This would help to reduce the import of gold and lower the amount that we are deficient. GST reforms have made the gold market of our country to be more organized and transparent.
Effect Of Demonetization On Gold Price
After the demonetization, our country faced severe economic and financial challenges. Though it was implemented to curb the black money, there were several effects which created a significant impact in various businesses of different sectors. It was evident that the demonetization created an immediate impact on the gold prices and increased the demand for this precious metal. Investors feared that the income tax department would monitor them as they would take part in money laundering by investing in gold. Thus the prices of gold experienced a drop in the Indian market.
With the rising demand for gold, there was no immediate impact, but only a long term impact was experienced on the gold prices after the demonetization measure. There was a retail demand for gold after the cash crunch due to demonetization. Gold dealers suffered from a drop in their business due to demonetization. The prices of gold would experience a seven-year low as suggested by the financial experts.
Thus there are serious challenges to be faced in the gold market due to the demonetization move of the government. Investors have now started to look for other products to continue with their investments.
The above is the influence of GST and demonetization on the gold prices.