23 July,2024 03:58 PM IST | Mumbai | mid-day online correspondent
Representational Pic/File
Gold and silver prices plummeted on Tuesday after the government proposed to hike the securities transaction tax on futures and options trade.
The gold prices plummeted by 5 per cent or Rs 3,702 to Rs 69,016 per 10 grams in futures trade on Tuesday, the PTI reported.
On the Multi Commodity Exchange, gold contracts for August delivery plunged Rs 3,702 or 5.09 per cent to Rs 69,016 per 10 grams in a business turnover of 12,397 lots, as per the PTI.
Whereas on the Multi Commodity Exchange, silver contracts for September delivery declined by Rs 4,704 or 5.27 per cent to Rs 84,499 per kg in a business turnover of 25,350 lots.
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Finance Minister Nirmala Sithraman on Tuesday proposed to increase the rate of securities transaction tax (STT) on futures and options (F&O) trade to discourage retail investors' participation in the risky instrument.
"It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded," she said in the Union Budget speech for FY2024-25.
"The market is currently responding with a short-term perspective, particularly concerning the Securities Transaction Tax (STT) adjustments in derivatives. This will undoubtedly impact the profitability of frequent traders," Vaibhav Porwal, Co-founder of Dezerv, said.
Globally, gold was trading 0.08 per cent higher at USD 2,444 per ounce in New York, according to the PTI.
Meanwhile, the government while announcing the Union Budget 2024 slashed customs duties on a range of products, including gold, silver, critical minerals, mobile phones and other electronic items, to cut input costs, increase value addition, promote export competitiveness and boost domestic manufacturing.
The basic customs duty on coins of precious metals, gold/silver findings, and gold and silver bars was reduced to 6 per cent from 15 per cent. It was cut to 5.35 per cent from 14.35 per cent for gold and silver dore.
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On platinum, palladium, osmium, ruthenium, and Iridium, the levy was cut to 6.4 per cent from 15.4 per cent.
The gems and jewellery exporters have been demanding for the last several years to cut duties on precious metals to boost exports and manufacturing.
"My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation while keeping the interest of the general public and consumers surmount," Finance Minister Nirmala Sitahraman said.
"To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6 per cent and that on platinum to 6.4 per cent," she added.
(with PTI inputs)
