As the world continues to keep an eye on breaking news out of Europe, Russia and Ukraine, today King World News has learned that India's Finance Ministry is about to make a decision that will have earthshaking implications for the gold market. The Finance Ministry is set to make the historic decision on February 28th when it submits its federal budget to Parliament.
Shockwaves Through The Gold Market
This would slash the existing gold tax by a stunning 80%, sending shockwaves through the gold market as Indian demand for gold would soar. A reversal of this damaging policy against gold will mean billions of dollars of new gold buying in the physical market.
Last fiscal year the tax rate of 10% chopped India’s gold imports in half from nearly 574 billion rupees ($9.4 billion) to 287 billion rupees ($4.7 billion). The Finance Ministry will decide on the proposal to reduce the tax 80%, back to it's early 2012 tax rate of 2% by the end of February. It will be interesting to see how the gold market trades ahead of this historic decision.
The dramatic cut in the import tax is being sought by India's Trade Ministry to slash costs for key raw materials such as gold, which jewelers must purchase for their products.
Indian jewelers have been crippled by the sharp tax increase over the past few years. This all stemmed from the government claiming they were clamping down on gold imports in order to control a growing current-account deficit. The tax rate soared from 2% in early 2012, to the current level of 10%.
This increased tax had the effect of chopping India’s gold imports in half, from nearly 574 billion rupees ($9.4 billion) to 287 billion rupees ($4.7 billion) last year.
The Only Victim – Western Central Banks
Lowering the tax would also curb the rampant amount of gold smuggling but it would also increase India's tax revenue as the black market for gold fades. The bottom line is India is doing what is best for India at this point, and the only real victim here will be the powerful forces in the West (central banks) who constantly short the paper gold market in order to suppress the price. ***ALSO JUST RELEASED: Richard Russell Warns Global Crisis To Get Worse – Sell All Stocks And Buy Gold & Silver CLICK HERE.
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