Indians buying gold at Rs 5,000 per 10 grams discount on cash deals
High gold prices and increased import duties in India have led to a rise in informal, cash-based gold transactions to avoid taxes. Consumers are increasingly opting for unrecorded sales to secure discounts, undermining government efforts to curb gold demand.
Why it matters
The trend highlights the difficulty of regulating traditional cultural consumption habits through fiscal policy and the growth of the shadow economy.
Gold prices, despite their recent correction, are still very high and the hike in gold import duties from 6% to 15% has raised the cost of jewellery further.Although prices have fallen since then, they are still nearly 28% above their level a year ago.So, even as gold prices remain elevated and taxes add to the cost, an increasing number of Indian buyers are now opting for cash transactions outside the formal system, and purchasing gold and jewellery without invoices that could leave a trail for authorities.Gold being bought at discount with under-the-counter cash salesFor bulk purchases, such off-the-record cash deals can bring prices down by as much as 6% from prevailing market rates, sources familiar with the trade told Bloomberg.
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