Is it cheaper to buy gold in Dubai rather than India? Motilal Oswal exec answers

For a long time now, the general perception among Indians has been that buying gold in Dubai is a better deal than buying it in India. This belief was partly due to VAT on gold jewellery until a few years ago, coupled with no import duty on gold in Dubai.

But with recent policy changes and the skyrocketing price of gold in mind, is it still profitable to buy gold in Dubai instead of India? Kishore Narne, Executive Director at Motilal Oswal, answered this frequently-asked question during a podcast appearance with finance influencer Sharan Hegde.

According to Kishore Narne, there is no significant difference between buying gold in India vs Dubai now.

The Motilal Oswal executive explained that buying gold in India was costlier because total taxes—including import duty, cess, and GST—added up to about 15.5%. But after recent changes, the import duty was reduced to around 2%, so the total tax is now about 5–5.5%.

This makes gold prices in India and Dubai roughly the same today.

“So earlier, we used to have an import duty on gold of roughly around 12%, plus a cess of around 1.5% on that. So that takes you to around 13.5% import duty, and then another 3% GST.

“So your total cost of purchase of gold in India tax was 15 and a half per cent,” Narne explained to Sharan Hegde.

He further explained that all gold in India is imported and how that affects its price.

“How gold price in India is calculated is: you import gold, the dollar price converted into rupees as per today's RBI reference rate, then you add a little bit of bank charges — around 10 pips — for the import and the conversion of the price.

“Then add the import duty, because we have to pay the government import duty. How much is that today? It's around 2% — it used to be 12 and a half per cent, but that reduced to 2% in the last Budget. And then 3% local GST is added,” said Narne.

That's where you purchase. So 15.5% you used to pay to the government earlier. Now it's around 3% GST anyway and around 2–2.5% import cost. So 5–5.5% is there. If you buy anything in Dubai, 5% VAT is there. So it's now equivalent, actually,” he concluded.

Source: HindustanTimes
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