India raised import duties on gold and platinum to 6 percent immediately from 4 percent. A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 4 percent, and an excise tax on refined gold will climb to 5 percent from 3 percent. About 80 percent of India’s current- account deficit, the broadest measure of trade, tracking goods, services and investment income, is due to gold imports, according to the Reserve Bank of India.
UBS AG said its gold flows to India on Jan. 21, when the tax revision was announced, were about twice the average. Indian purchases “paused” yesterday and may be “muted” in the next few days as buyers wait for clarity on details related to the change in import taxes, a typical response following such an announcement, the bank wrote today in a report.
Buying gold is considered auspicious in India during religious festivals and weddings. The festivals start in August and end in November, and are followed by the wedding season.