The Indian government has ended the upfront tax exemption for banks and nominated agencies importing gold, silver, and platinum. Effective 1 April 2026, these imports are now subject to a 3% Integrated Goods and Services Tax (IGST). Revenue Secretary Arvind Shrivastava confirmed that banks have been paying this tax since the specified date, and the government notified the GST Council of this change on 8 October.
The exemption, initially introduced in 2017 for gold imports, was later extended to other precious metals. Under this relief, banks could import these metals without paying IGST upfront. The withdrawal of this exemption means that bank imports now attract the 3% levy at customs clearance, altering the financial dynamics for importers. The government aims to ensure uniform taxation across different import routes, eliminating the previous tax advantage enjoyed by banks over other channels.
Importers can recover the levy through input tax credits, but they still need funds to pay the tax upfront. This requirement increases short-term cash needs and may raise financing costs, particularly for banks handling large shipments. The change could influence prices along the supply chain, potentially affecting local jewellers and buyers, though the impact on retail prices is not guaranteed to be a direct 3% increase.
The policy shift comes amid government efforts to monitor foreign currency spending and address trade deficits. Despite the change, gold demand remains strong ahead of the festive and wedding seasons. The broader policy direction emphasizes organized trade and consistent taxation.