Import duty that is levied on gold to combat the current account deficit issue in the country has worked otherwise leading to the eruption of grey channels in the industry. The incidence of gold being smuggled in the country and then being sold at a discount in comparison to official rates has risen.
In August of 2013, the import tax on gold has been increased to 10% for narrowing down the current account deficit of India.
The gems and jeweller's demand of a lower duty on the import of gold is mainly on the premise that it shall boost up the demand of yellow metal which is seen fading and also render support to gold prices in international markets which have surged up due to massive weakening of the dollar currency.
While gold in the international markets is trading near 17-months high, in the domestic market just ahead of the budget, the demand for the precious yellow metal has been hit as jewelers expect a lower import duty on gold.
As told to Reuters, VP of the Indian Bullion Jewellers Association (IBJA) said, "We are expecting a 2 to 4 percent reduction in the import duty".
The organized sector expects of 5% import duty as against the 10% to be a fair deal and a decent gift from the Arun Jaitley's last full budget.
Another move that the traders in gold demand expect of after the discruption caused due to demonetisation and GST is the increase in cash purchase limit for the precious metal plus revision in GST rates which currently stands at 3% to be reduced to 1%.