India Confirms 3% IGST on Bank Gold Imports Since April 1, Ending 2017 Exemption

India's tax break for bank-led gold imports is gone, and the government has now said so on the record.

Revenue Secretary Arvind Shrivastava said Thursday, Oct. 8, that the exemption for designated banks and nominated agencies was not extended beyond March 31. Gold, silver and platinum brought in through those channels have faced a 3% integrated GST (IGST) since April 1. The GST Council was briefed on the change at its meeting the same day.

The exemption dates to 2017, when it covered gold and was later widened to silver and platinum. Before April 1 of this year, banks and agencies on a periodically notified list paid nothing.

Why New Delhi says it did it

Shrivastava's stated reason is tax parity. He said the government wanted to ensure that "we do not have tax becoming a reason for one route being preferential to another."

There is now more than one route. Most cargoes still arrive through approved banks and nominated agencies. Qualified jewelers can also bring in metal through the India International Bullion Exchange, where duties and taxes are paid.

Renisha Chainani, chief research officer at Augmont, told the Economic Times that "the 2017 exemption made sense when only a few banks and nominated agencies brought bullion into India. Now that bullion exchanges offer another route, everyone should follow the same rules on duty and tax."

A tax on top of a tax hike

The timing is not an accident of paperwork. The government has been trying to throttle non-essential gold imports because they drain foreign exchange and weigh on the rupee. Higher import bills after the Iran-US-Israel war made that worse.

In May, India raised the import duty on gold and silver to 15% from 6%, and on platinum to 15.4% from 6.4%. Prime Minister Narendra Modi has also publicly urged Indians to avoid buying gold.

Dealers now quote prices inclusive of the 15% import duty and a 3% sales levy. Domestic gold traded around 150,900 rupees per 10 grams on Friday, Oct. 9, after dropping to 145,538 rupees the week before, the lowest in nearly two months. One dealer quoted a discount of up to $6 an ounce to official domestic prices this week, down from up to $14 the week before.

The curbs have not stopped the buying outright. Gold imports for April-August of fiscal 2026-27 rose 3.38% to $17.47 billion. Silver imports fell 8.81% to $1.74 billion.

What importers face

The Directorate General of Foreign Trade issued a new list of authorized importers on April 17, but the related IGST exemption notification was left unchanged. Some importers have been paying the tax for months.

Shanghai Metals Market's analysis says the change is not a permanent extra burden, because the tax is paid upfront at import rather than later. But it raises short-term financing needs and working capital requirements for importers. SMM said India's peak gold consumption season begins in mid-October, which will increase the funding pressure.

Demand on the ground is already price-sensitive. "The moment prices rise, they hit the pause button and wait for a correction," an Ahmedabad-based jeweller said. A Mumbai dealer with a private bank said that if investment demand picks up in the festive season, as it did last year, the market could flip from a discount to a premium.

Dussehra falls in October and Diwali in early November. Buying gold is considered auspicious at both.

Meanwhile, China is stacking up

The contrast with Beijing is stark. The Financial Times reported that China spent $158.8 billion importing more than 1,000 tonnes of gold in the first eight months of 2026. For all of 2025, it spent $96.5 billion on 886 tonnes.

That comes after gold rallied from about $2,625 an ounce at the start of 2025 to a peak of $5,595 in January. The FT also reported that Chinese holdings of US Treasuries fell to $618 billion in July, the lowest since August 2008.

"Both the central bank and private investors are diversifying their reserves and savings towards an asset with no counterparty risk, as part of a broader long-term wealth preservation strategy," said Lisa Liu, managing director at Gold Mountains Asset Management, part of Zijin Mining Group.

China's market is showing physical demand as trading resumes after the Golden Week holiday. Gold traded at a $10 an ounce premium to the global benchmark this week, according to Bernard Sin, regional director for Greater China at MKS PAMP.

What to watch

The number to track is the dealer discount in India. If it flips to a premium during Diwali buying, imports are running ahead of what the 15% duty and 3% IGST were designed to allow. The GST Council has also had a proposal before it, reported by the Times of India ahead of the Oct. 8 meeting, to bring state trading firms MMTC and STC into the same tax treatment. No decision on that has been made public.