Commodity Online
NEW DELHI: India's annual Budget is round the corner and speculations are rife over various measures being planned by the new United Progressive Alliance government, which has Congress veteran Pranab Mukherjee as its finance minister, for the people and new avenues to rope in more revenues.

The government is expected to introduce some new taxes to fund its expected farmers-friendly Budget, which will be presented in the Parliament in July. Even as the FM is busy with the budget preparations, analysts speculate that the Budget will find some areas to tax and gold will be one of them.



According to economists, Pranab will find it easy to impose some extra import tax on gold as the last time the government did it was in 2005 and at that time the price of gold was Rs 5,000 per 10 gm. Then a Rs-100/10gm import duty was imposed on yellow metal.

Things have changed a lot after that, especially in 2008-09, as far as gold is concerned. Gold prices are around Rs 15,000 per 10 gm now — three times more than the 2005 level. And demand for the commodity has gone up and the prices are expected to stay at that level considering the safe haven status of the yellow metal during the recession period.

So, if there is one major commodity which can be taxed that is gold. And, there is a strong case for a hike in import duty on gold to at least Rs 200/10 gm, which will ensure a revenue of Rs 1,200 crore for the exchequer, thinking that India imports about 600 tonnes of gold this year (There is a fall in imports following the rise in prices).

Raising the import duty to Rs 200 will hardly hurt consumers as anyone who can afford to pay Rs 14,500 can easily pay Rs 14,600/10 gm or Rs 100 extra.

Traders may raise some objections, but they are not worth considering.

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