Excise on Branded Gold Coins Abolished

New Delhi: The government of India has scrapped the excise duty on branded gold coins, a move that one would assume benefit the industry and consumers alike.

However, World Gold Council (WGC) and Titan are not too enthused about the step, and do not expect to see a major rise in demand for branded gold coins. Commenting on the move, World Gold Council said, “A 1% excise duty cut will not make much of a difference. Branded coins are sold at a very low margin.” However, WGC acknowledged that the step will “surely boost investment sentiment”.

Titan does not expect to see any increase in demand due to scrapping of excise duty on branded gold coins. “Branded gold coins form less than 10% of total sales for jewellery companies,” Titan has reportedly said.

Mr. Saurabh Gadgil, Chairman & Managing Director of PNG Jewellers and Director of Indian Bullion Jewellers Association (IBJA) said, “The relaxation in excise duty for branded Ashok Chakra gold coins minted by the government is a positive move to promote the Make in India campaign. The disparity amidst local jewellers to sell unbranded coins over branded ones at lower cost will now come to rest, customers will take pride in buying the Ashok Chakra embossed coins like the bald eagle and maple leaf embossed gold coins minted in America and Canada respectively. This move is expected to bring about standardization in the market with respect to buying gold coins.”

Meanwhile, the government had last week clarified that it is not planning to impose any limit on domestic gold holding. Prime Minister Narendra Modi had announced on November 8 to demonetise Rs. 500 and Rs. 1000 currency notes to combat black money and corruption from the economy. Following it, there were anticipation that the next step might be imposing restrictions on gold holding by individuals, as reportedly many people had converted their black money into gold after the move. However, government sources have denied any such move. India is the world’s second biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts.