DUBAI Jan 11: NRIs buying gold in Dubai will no longer be quite as cheap as before, thanks to a new 5% import tax.
Recently, Dubai imposed a 5% import tax on gold and diamond jewellery. Apart from impacting the Indian gold market, which exports 45% to 50% of Dubai's total gold jewellery, NRIs will feel the heat as this will no longer be a cheap destination for gold jewellery.
Dubai has always been a shopping destination for gold jewellery for NRIs as well as Indians travelling to this city.
The comparatively cheaper rates, reliable quality, and the fact that Indians do not need to pay 10% customs duty if they wear a reasonable amount of gold jewellery on their body when they return to India are the reasons that drew many to buy gold from Dubai.
However, this new tax will practically wipe out the difference in gold rates in India and Dubai, making many Indians, including NRIs, turn to the Indian market to buy gold jewellery. In short, this 5% import tax will give a push to India's gold market and also to the domestic economy.
The gold that is exported from India to Dubai is further re-exported to other parts of the world. But, this new tax is not applicable on re-export through Dubai. In short, the gold jewellery intended to be used in Dubai is only liable for this tax.