MCX gold trades at discount to import price on duty cut reports

Market players say the discount points to the possibility of a one per cent reduction in taxes on the precious metal

Gold for delivery in February was trading at Rs 31,470 per 10 grams, or at a half per cent discount to landed cost of imported gold, at 5:30 on Monday evening on the Multi Commodity Exchange. The price had fallen by one per cent in the morning.
 

 

Market players say the discount reflects the possibility of a one per cent reduction in taxes on the precious metal. Gold attracts 10 per cent import duty and three per cent goods and services tax. 
 

 

Since, GST revenues are shared equally between the Centre and the states, a proposal to pare the rates here might meet resistance from the states. The Centre would then have to consider a reduction in import duty.

 

As a result of this impasse, MCX gold gave up some of this discount in late afternoon trade, when international gold prices also started firming up. The Centre is finalising a comprehensive gold policy that is likely to be announced soon. Under this policy, the government is most likely to dwell on cutting taxes on gold as recommended by the Niti Aayog panel.

 

Meanwhile, standard gold closed at Rs 31,585 per ten grams in Mumbai's spot market today.