INDIA June 06 2017 11:08 AM

MUMBAI (Scrap Register): UBS analysts are calling weekend developments in India, including announcement of a 3% goods and services tax on gold, as a relatively subdued outcome and encouraging.

The GST tax was at the lower end of the range of expectations of 2% to 5%. No change was made to the gold import tax of 10%. 

The GST on gold therefore brings the total tax bill for gold slightly higher to 13% (10% import duty plus 3% GST) from 12% previously (10% import duty plus 1% excise tax plus 1% VAT).

UBS thinks this outcome should be supportive enough for the ongoing recovery of core gold demand in India to continue. 

The removal of this policy uncertainty should also allow the local gold market to now focus on adjusting to the current environment, where the government continues to push the industry towards the formal sector.