A hike in taxes on gold sales in India could stoke under-the-counter buying and drive up appetite for precious metal smuggled into the country, where millions of people store big chunks of their wealth in bullion and jewellery. As part of a new nationwide sales tax regime that kicked in on July 1, the Goods and Services Tax (GST) on gold has jumped to 3% from 1.2% previously, with traders and buyers saying the move will likely force more transactions into the black market. The tax hike could also encourage more smuggling into the world’s second biggest gold consumer, which buys almost all its bullion abroad. The World Gold Council estimates smuggling networks imported up to 120 tonnes of gold into India in 2016. “A lower import duty would increase legal imports and ultimately legal sales.

Source: Hindustan Times July 04, 2017 07:07 UTC