Finance Minister Nirmala Sitharaman has introduced significant cuts for gold and silver bars in the Union Budget 2024, which is expected to provide a substantial boost to gems and jewellery companies with unhedged gold. Major beneficiaries of this announcement include Tata Group-backed Titan Company and Senco Gold. The price of gold is projected to decrease, while demand is anticipated to rise.
Sitharaman announced that the Basic Customs Duty (BCD) and Agriculture Infrastructure and Development Cess (AIDC) on gold and silver bars have been reduced to 5% and 1%, respectively, from the previous 10% and 5%. Consequently, the total tax rate on gold, including 3% GST, will now be 9%, down from 18%. These rate cuts are effective immediately. Additionally, the holding period for classifying gold as either a short-term or long-term asset has been reduced from 36 months to 24 months.
Furthermore, the finance minister announced a reduction in customs duty on gold and silver to 6% and on platinum to 6.4%. According to HDFC Securities, this move will likely boost jewellery consumption.
