India Tightens Gold, Silver Import Taxes to Curb Forex Outflows, Jewellers Face Cost Pressures

Gold, silver and platinum imports by banks and nominated agencies are attracting 3 per cent Integrated Goods and Services Tax (IGST) from April 1, 2026, after the government did not extend their earlier exemption, Revenue Secretary Arvind Shrivastava said.

The government informed the GST Council that the list of designated banks and nominated agencies eligible for the exemption had not been extended beyond March 31. The move aims to ensure parity in taxation between precious metals imported through different channels, including bullion.

The change follows an increase in customs duties announced in May. Import duty on gold and silver rose from 6 per cent to 15 per cent, while the duty on platinum increased from 6.4 per cent to 15.4 per cent. The government had cited concerns over non-essential imports and foreign-exchange outflows.

Prime Minister Narendra Modi has also appealed to people to avoid purchasing gold for a year amid pressure on the rupee and a rise in the country’s import bill following the Iran-US-Israel conflict.

India is the world’s second-largest gold consumer after China, with imports driven largely by demand from the jewellery industry.

Trade data for the first five months of the 2026-27 financial year showed differing trends in precious-metal imports. Gold imports increased 3.38 per cent to USD 17.47 billion during April-August, while silver imports declined 8.81 per cent to USD 1.74 billion, according to the reported figures.

The tax changes affect banks and nominated agencies that previously imported precious metals without paying IGST under the exemption. The 3 per cent IGST is separate from the applicable customs duty, and the two should not be treated as a single tax rate.

Higher import costs may affect bullion procurement and the jewellery trade, where gold and silver are key raw materials. The extent of the impact on domestic prices, consumer demand and jewellery exports will depend on import trends and market conditions.

The government’s measures form part of its efforts to address precious-metal imports and foreign-exchange outflows. India’s import figures in the coming months will indicate how demand responds to the revised tax treatment and higher customs duties.