BEIJING, Nov. 1 -- China has abolished a long-standing tax incentive on gold sales in a move that could raise costs for consumers in one of the world's largest bullion markets.

Effective today, the Ministry of Finance announced that retailers will no longer be allowed to offset a value-added tax (VAT) when selling gold purchased from the Shanghai Gold Exchange, Bloomberg reported.

The new rule applies whether the gold is sold directly or processed into other forms, covering investment products like high-purity bars and coins as well as jewellery and industrial materials.

While the change is expected to boost government revenue at a time when weak economic growth has strained public finances, analysts warn it will likely increase the co...