Gold Prices, Taxes Drive Indian Buyers into Unofficial Market
High gold prices and steep taxes are driving Indian buyers to purchase the precious metal without receipts in the unofficial market, where transactions can be traced by authorities. According to insiders, buying off-the-books with cash can save customers up to 6% on prevailing market prices for bulk purchases. This is because dealers accepting cash can sidestep taxes and pass the savings on to their clients.
Anuradha, a 55-year-old homemaker, bought gold ornaments for her daughter's wedding at a discount of ₹5,000 per 10 grams without taking any receipt. She said she couldn't resist the offer due to the exorbitant prices and her trust in the jeweller.
The unofficial market has flourished since the government doubled import levies on gold and silver to 15% as part of measures to curb purchases and reduce India's ballooning trade deficit. Retail customers also have to pay an additional 3% GST, making it more attractive for them to buy in the informal sector.
Traders in the cash market can source gold at discounts of up to ₹6,000 per 10 grams compared to prevailing domestic prices, according to insiders. Prices vary widely in the fragmented and informal trade, where deals are negotiated individually rather than against a common benchmark.