Finance minister Pranab Mukherjee on Monday doubled the customs duty on gold bars and coins, a move that is likely to raise prices of gold coins and bars as well as unbranded jewellery.
According to the new proposal, customs duty on gold coins and bars will go from Rs Rs 100 per 10 gram to Rs 200 per 10 gram.
“The hike in the customs duty will lead to a rise in the prices of bars and coins. Since custom duty is a small component in the pricing, international gold prices will largely determine the prices,” Sandeep Bandhyopadhyay, managing director at Reliance Money.
While the prices of gold coins and bars are certain to go up, financial experts advise against it as an investment option.
“The prices of coins and bars are always priced higher by over 10 per cent and it makes sense for investors to invest in gold through exchange traded funds,” said Amar Pandit, a Mumbai based financial planner.
Since unbranded jewellery segment did not receive any benefit, their prices are bound to go up with the rise in the prices of bars and coins.
However, branded jewellery retailers feel that this is going to impact them too even though they have received excise tax exemption.
“It is applicable to every manufacturer and retailer and will generate 500-odd crores for the government,” said C.K. Venkataraman, chief operating officer at Tanishq.