Page 11 - Bollion World Volume 4 Issue 8 August 2024

Bullion World | Volume 4 | Issue 8 | August 2024

UNION 20 Key

BUDGET 24 Highlights

The 2024-25 Union Budget has introduced several significant measures to
bolster the gold industry, with an emphasis on reducing taxes and fostering
organized growth. These policy changes are expected to have a profound
impact on the local gold market, supporting industry reform and growth.

Major Changes in Gold Import Duties and Taxes • Reduction in Gold Smuggling: The lowered
customs duty is likely to reduce gold smuggling by
• Gold Import Duty Reduction: The import duty on making official imports more profitable compared to
gold and gold doré has been significantly slashed. unofficial channels.
The total customs duty on gold has been reduced • • Impact on Platinum Alloy Imports: The reduced
from 15% to 6%, and on gold doré from 14.35% duty on platinum alloy may decrease its import from
to 5.35%. This marks the sharpest reduction on the UAE, which has been contributing to a domestic
record and the lowest duty since June 2013. These price discount.
changes take effect from July 24, 2024. •
• Decreased Landed Cost of Gold: Lower duties
• Long-Term Capital Gains Tax Adjustment: The will reduce the landed cost of gold, improving the
holding period for long-term capital gains tax on gold competitiveness of the domestic gold industry and
has been reduced from 36 months to 24 months. freeing up working capital for exporters.
Additionally, the tax rate for long-term capital gains •
has been lowered from 20% with indexation to • Boost to Gold Jewellery Production: The
12.5% without indexation, effective July 23, 2024. government anticipates that the duty cuts will
enhance gold jewellery production, creating more
• Gold ETFs and Mutual Funds Categorization: employment in this labour-intensive sector.
Gold ETFs and mutual funds have been redefined
to exclude them from "Specified Mutual Funds" that However, there are some short-term concerns. Bullion
are subject to short-term capital gains tax rates. dealers, manufacturers, and retailers may experience
Now, gains from gold ETFs and mutual funds will be a temporary loss on inventory purchased at higher
taxed as long-term capital gains if held for more than prices before the budget announcement. These losses
12 months for listed securities and 24 months for are expected to be recouped over a few quarters as
unlisted securities. This amendment will take effect consumer demand increases in response to lower prices.
from April 1, 2026, aligning with the assessment
year 2026-27. For gold loan NBFCs a decrease in gold import duties
might result in lower gold prices, potentially affecting gold
Implications for the Gold Market loan firms adversely in the short term by reducing their
These policy adjustments are expected to bring financial buffer or 'safety margin.'
substantial changes to the gold industry, including:

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