The Indian government has terminated tax relief for banks importing gold, silver, and platinum, requiring them to pay a 3% Integrated Goods and Services Tax (IGST) upfront. Revenue Secretary Arvind Shrivastava confirmed that banks have been paying this tax since April 1, 2026, with the government notifying the GST Council of this change on October 8. The move aims to ensure uniform tax rules across different import routes, eliminating the previous tax advantage enjoyed by banks.
The exemption, introduced in 2017 for gold and later extended to other precious metals, allowed banks to import these metals without paying IGST upfront. With the exemption’s expiration, bank imports now attract the 3% levy at customs clearance, increasing their short-term cash needs and potential financing costs. The government seeks to align bank imports with shipments through organized trading platforms like the India International Bullion Exchange in Gujarat’s GIFT City.
While the withdrawal of tax relief does not guarantee a 3% price hike for retail gold or silver, higher funding costs could influence supply chain prices. Banks and importers may adjust margins slightly, potentially affecting local jewellers and buyers. The policy shift comes amid government efforts to monitor foreign currency spending and reduce trade deficits, with gold demand remaining strong ahead of festive and wedding seasons.