The implementation of GST has particularly affected the prices of commodities like gold.
Effect of GST on Gold Prices
As per the new tax structure, the GST on gold is set at 3% for both finished and unfinished products, which will be paid by the end consumer.
Apart from this, the tax regime also levies an additional 5% on making charges of gold jewellery. The additional charges have upshot the price of gold as there were no making charges in the previous taxation system. This rate is, however, a revised version which was initially set at 18%. The initial GST on making charges would have affected the prices of the finished products massively since end-consumers had to bear all the expenses. However, the 3% GST, the 10% import duty, and 5% making charges have made the yellow metal’s price increase by 0.75%.
If there was another indicator to measure wealth in the world, barring currency, it would be gold. It is one of the nine noble metals, but gold’s value in the economy surpasses that of its counterparts. But the exploration and extraction of gold is a slow-moving, laborious process.
However, this metal still has a readily available market across the globe, which increases its liquidity, thereby making it an ideal asset. Owners of gold articles have the freedom to convert them into cash with ease.
Moreover, gold is a luxury good, which means that people purchase it in larger quantities when their income rises. Therefore, this yellow metal generally exhibits a steady increase due to high demand and inadequate supply, especially in a country like India. Most free-market economies of the world use gold reserves to hedge against inflation. As a result, this metal possesses an intrinsic value in the global economy as well.
When it comes to buying gold for jewellery or investment purposes, people often get confused about the purity and quality of the gold. The two most commonly confused types of gold are KDM gold and hallmark gold. KDM gold refers to the gold that is made by mixing cadmium with gold, where gold is 92% and cadmium 8%. This brings down the gold's purity level to 92%. However, of late, the production of KDM gold has stopped, due to the associated health risks. Hallmark gold is gold certified by the Bureau of Indian Standards. The test is conducted at the assaying centres approved by the BIS. Hallmark gold is available in four varieties:
Higher the carat, better the purity. Hence, depending on how you plan to use the gold, you may select the carat.
Gold has always been one of the most significant investment options for Indians. The high liquidity of gold and its consistent value makes it a popular option for investment purposes. It also acts as a hedge against fluctuations in the market. Gold can either be pledged in the form of a gold loan or it can be sold to meet urgent financial deficits. It pays to be aware of the value of gold to prevent unscrupulous activities by the lenders or jewelers. It is not very complicated to calculate the value of the gold. The weight and the purity of the gold will have to be tested at an assaying laboratory. There are two methods to calculate the purity of the gold. It can be denoted in percentage or in karat.
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