Finance Minister Pranab Mukherjee announced in the Lok Sabha on Monday that the tax on all branded or unbranded precious metals – gold, silver, platinum - has been withdrawn.
According to newswire Reuters, India will also delay by one year until fiscal 2013/14 the introduction of measures to crack down on tax evasion, Mukherjee said.
The burden of proving tax evasion will lie with the authorities rather than with overseas investors., Mukherjee added.
The move comes in response to concerns among foreign investors that has caused an exodus of funds. The announcement is likely to cheer domestic markets, according to many experts.
"These comments should provide short-term relief to the domestic markets, however, the decision to put the onus on tax authorities to prove liabilities could infuse some extent of ambiguity and subjectivity into the proposals. For now, the markets will cheer clarity on the provisions and deferment of the implementation date," said Radhika Rao, an economist wth Forecast PTE, Singapore.”
The rupee strengthened against the dollar, while stocks cut losses after the FM announced the amendments.
The Sensex was down 0.5 percent, cutting losses of nearly 1 percent before the announcement, while the rupee was trading at 53.01 to the dollar.
More to come…