Dubai: As the customs duty on gold was increased by 2.5 percent in the union budget, there will be huge difference in the market price of gold in Gulf countries and India. The difference in price will be upto Rs 1500-1600 per sovereign. This is likely to give a boost to the gold sales in Gulf.
Earlier, the customs duty on gold was 10 percent which was raised to 12.5 percent. The jewellery owners in Dubai expect that the tourists who arrive in the city will purchase more gold. However, gold smuggling to India also is likely to escalate in the coming days.
When VAT (Value Added Tax) was implemented in UAE, gold sales was slightly affected. Five percent of the price is charged as VAT. This could lead to a price difference upto Rs 600-800.
On Saturday, the price of one gram of 22 carat gold was Rs 3210 which is Dh 169 (around Rs 3150) in UAE. But its price in Dubai was Dh 159 (around Rs 2960) on Saturday. The difference in price is about Rs 1520 when exchange rate also is considered.
In India, the lowest price for gold is in Kerala. When one gram of gold costs Rs 3210 in Kerala, it was Rs 3360 in Mumbai and Rs 3350 in Delhi. If 24 carat gold is purchased from UAE, the price difference is upto Rs 1800. No VAT is levied for 24 carat gold in UAE. Also the VAT levied from tourists is refunded at the airport.
Though there are limits for the amount of gold that can be possessed while going from foreign countries to India, the customs officers normally ignore the gold worn on the body. So, most of the people wear gold on body while returning.
Huge amount of gold is often seized at the airports in Kerala these days. It is learnt that this is only the tip of the ice berg. Due to the price difference, gold smuggling to Kerala will only increase.