Many NRIs used to buy gold in Dubai due to its low prices and VAT-free status. However, recent changes have made buying gold in India more appealing.
The Indian Union Budget 2024 brought three key benefits for the jewelry sector:
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* Customs Duty was reduced from 15% to 6%.
* Long-Term Capital Gains Tax dropped from 20% to 12.5%.
* The holding period for gold to qualify as a long-term asset was cut from 36 months to 24 months.
These changes make Indian gold prices more competitive compared to Dubai’s. Additionally, NRIs in Dubai don’t get VAT refunds, and Indian travelers only receive partial refunds, further decreasing the appeal of buying gold abroad.
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Buying gold locally avoids issues like design mismatches and additional alteration costs.
With the lower taxes and shorter holding periods, local gold purchases are expected to rise. This could also reduce unofficial gold trading and increase formal transactions.
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There’s hope that future GST increases won’t diminish these benefits, as GST is currently 3% on jewelry.
Overall, these adjustments are making local gold purchases more attractive and convenient.
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