India Considers Removing IGST Exemption on Precious Metals

The Indian government is reviewing a potential change in the tax treatment of precious-metal imports, with gold, silver, and platinum imports by banks and nominated agencies possibly losing their Integrated GST (IGST) exemption. The proposal is set for discussion by the GST Council, which has rescheduled its meeting to October 8, 2026.

Currently, imports of these metals attract a 3% IGST, but specified banks and government-nominated agencies are exempt from this tax. The exemption, introduced in 2017, aimed to regulate precious-metal imports more tightly. If withdrawn, these entities would face the same tax obligations as other bullion importers, creating greater uniformity in taxation.

The government is considering this change due to concerns over the substantial foreign currency outflow from gold imports. India, the world’s second-largest gold consumer, saw a 3.38% increase in gold imports during April-August 2026-27, reaching $17.47 billion. Silver imports, however, declined 8.81% to $1.74 billion during the same period.

The withdrawal of the IGST exemption could increase the tax cost at the import stage, potentially putting upward pressure on bullion prices. However, the final impact on retail gold or silver prices will depend on how the additional tax cost moves through the supply chain. The proposal has not yet been approved, and the final outcome will depend on the GST Council’s decision.