Buying gold from Dubai no longer advantageous post-budget: Popley Group of Jewellers 

 
Rajiv Popley, Director of Popley Group of Jewellers, claims that the new tax structure, which reduces the long-term capital gains tax rate to 12.5% and shortens the holding period to 24 months, is anticipated to encourage more transparent sales and reduce informal trading practices 

Dubai: In the wake of the Union Budget 2024, Rajiv Popley, Director of Popley Group of Jewellers, suggested that purchasing gold from Dubai is no longer beneficial for Indian buyers. The Budget introduced significant changes aimed at the gems and jewellery sector, including a substantial reduction in customs duties, a decrease in long-term capital gains tax, and a shortened holding period for gold to qualify as a long-term asset. 

Indian jewellery stores saw a marked decrease in gold prices following the Budget announcement, which lowered customs duty on gold from 15 percent to 6 percent, and reduced the long-term capital gains tax from 20 percent to 12.5 percent while also shortening the holding period for gold to 24 months. This development has made buying gold abroad less attractive, especially from Dubai, where VAT refunds and lower labour costs were previously seen as advantages. 

In an interview, Popley explained the new dynamics. “With the customs duty cut, the 5 percent VAT in Dubai no longer offsets the cost benefits due to lower labour costs in India,” Popley said. “The perceived advantage of overseas gold is now a thing of the past. We’re seeing more buyers preferring to purchase locally due to better alignment in pricing.” 

Popley noted that prior to the Budget, many buyers chose to purchase gold abroad to capitalize on price differences. However, with the new measures in place, the cost advantage has diminished, leading to a shift in buying patterns. Additionally, Popley highlighted that an average Indian buyer faced additional challenges, such as VAT refund limitations and the inconvenience of needing to alter or return ill-fitting purchases made abroad. 

The reduction in long-term capital gains tax is also expected to impact transaction behaviour. Previously, buyers were hesitant to sell gold due to high tax rates and lengthy holding periods. The new tax structure, which reduces the rate to 12.5 percent and shortens the holding period to 24 months, is anticipated to encourage more transparent sales and reduce informal trading practices. 

Popley also anticipates potential future government measures aimed at better recording and regulating gold holdings. “There might be initiatives to encourage the declaration and recording of gold holdings,” he suggested. “This could help streamline the gold market and improve transparency.” 

Looking ahead, Popley remains optimistic that future tax policies will continue to benefit the sector. “We hope the current GST rate of 3 percent on jewellery remains stable, as any increase could impact consumer spending,” he concluded. 

Overall, the Union Budget 2024 has recalibrated the gold market, making domestic purchases more competitive and potentially ending parallel trading practices previously prevalent due to significant price differences between India and international markets. 
 
Retail Jeweller ME News