Many Indians have long believed that buying gold in Dubai is more advantageous than in India, often due to lower VAT and no import duties in Dubai. However, with recent policy adjustments and the current high price of gold, the question remains: is Dubai still the better option?
Kishore Narne, Executive Director at Motilal Oswal, addressed this common query during a podcast with finance influencer Sharan Hegde, offering insights into the current gold market dynamics.
Gold Prices: India vs. Dubai Today
According to Narne, the price difference between buying gold in India and Dubai has significantly narrowed. Previously, India’s total taxes on gold, including import duty and GST, amounted to approximately 15.5%, making it more expensive. However, following recent budget changes, the import duty on gold has been reduced to around 2%, bringing the total tax burden to roughly 5-5.5%.
This reduction in import duty means that gold prices in both India and Dubai are now quite comparable.
Narne detailed how gold prices in India are calculated. The process involves importing gold, converting the dollar price to rupees using the current RBI reference rate, adding bank charges (around 0.10%), and then factoring in the import duty. He noted that the import duty, which was previously 12.5%, has now been reduced to 2%. Coupled with the 3% local GST, the total tax impact is approximately 5-5.5%.
In comparison, Dubai levies a 5% VAT on gold purchases. Therefore, Narne concluded that the overall cost of buying gold is now roughly equivalent between the two locations.