Gold shops witness dry spell post-GST rollout
Mumbai-India (July 9) Gold shops in the city that saw a huge rush of customers in the days before the GST regime are now witnessing a dry spell. Majority of gold dealers said that many customers had made advance booking of gold items and even paid a token sum. Due to this, now there are few customers at the shops post GST.
"In many ways, GST regime was presented to customers as inflationary for gold. So we saw large number of people hurrying up with the purchases pre-GST," said P V Jose, patron, Jewellery Manufacturers Association.
Gold jewellery earlier attracted 1% VAT but under the GST regime, it will be taxed at 1.2% to 3%. So, many people have already booked and paid in advance for gold ornaments," said B Girirajan, patron, All Kerala Gold and Silver Merchants' Association (AKGSMA).
Three weeks prior to the GST rollout, most shops were bustling with customers. "Many customers have made advance payments for gold prior to the GST rollout so that they can buy during the marriage season," said Girirajan.
He said the rush at gold stores is likely to be low this marriage season as most people have made advance purchases.
"Usually a rush is witnessed around the first week of August but since most of them have already bought crowds would be less. But it will pick up soon as gold will always be relevant in the market," said Girirajan. Ever since the cash transaction limits was brought down to Rs two lakh earlier this year, there has been a new trend in the purchase of gold this year: cashless transactions.
"Most families spend more than Rs two lakh on gold for marriages. So customers select the gold they require and pay a small amount in advance to book. Then they make the transaction via bank transfer. The whole transaction is completed in two to three days," said Girirajan.
The rise in cashless transactions has brought about several changes in the gold market. "Today most gold stores do not dispense liquid cash when they are buying gold. Mostly it's via bank transfer," said Jose.
"There are some customers who prefer cash in return for gold but since demonetization there has been a general aversion against liquid cash. Its impact can be seen in the gold market. People in Kerala still prefer having their financial assets to be tangible to a certain extent. The possibility of demonetization is something they have witnessed. So lots of people are converting cash assets to gold," he added.
TheTimesOfIndia
