Gold discounts removed as sales increase after GST-induced slump

By

Isabelle Crossley

Published
Aug 9, 2017

The GST introduced a tax of three percent on gold that caused a dramatic sales drop but sales are rising again at a rate sufficient enough that discounts have been removed.

The Indian rupee has recently risen against the US dollar and consumer demand is returning after the Goods and Services Tax (GST) caused a rocky month of sales when it was first implemented. Despite the fact that global gold prices are at historic lows, India’s market appears to be recovering somewhat from its own recent slump.

After the GST was rolled out, gold prices in India dropped by 2.41 percent, however, the price difference between pre- and post GST gold prices has now narrowed down to 200 rupees (approximately three dollars) per ten grams and this is due to a drop in the price of gold through discounting.

June had seen gold jewellery sales increase as people feared that the GST’s three percent tax would drive up gold prices. However, discounts had to be introduced due to the drop in sales post GST.

According to Bhargava Vaidya, gold trade analyst and consultant, “Demand for gold is likely to rise as prices have fallen and are remaining more or less steady. This is why the discount on gold has disappeared, and I do not see prices to fall drastically from the current level.”

Moreover, with festival season approaching, sales should receive another boost and jewellers are currently restocking for the holiday season.