Gold, Silver Taxes Double to 18.45 PC After Import Duties Increase to 15 PC

Chennai: Intended to curb the import and consumption of gold, silver, and platinum, the government has increased the customs duty, and Agriculture Infrastructure and Development Cess (AIDC) from 6 per cent to 15 per cent, following which the total tax incidence of the gold and silver has more than doubled from 9.18 per cent to 18.45 per cent. As per this, on 10 gm gold is valued Rs 1,50,000 before tax, the tax portion will increase by Rs 13,906.

Under the earlier regime, imports of gold and silver products attracted 5 per cent Basic Customs Duty (BCD) and 1 per cent Agriculture Infrastructure and Development Cess (AIDC), taking the total customs levy to 6 per cent. After adding 3 per cent Integrated GST (IGST), the effective total import duty worked out to 9.18%.

The revised structure doubles the BCD from 5 per cent to 10 per cent and raises the AIDC five-fold from 1 per cent to 5 per cent. The combined customs levy has therefore jumped from 6 per cent to 15 per cent. Including IGST, the effective import duty has surged from 9.18 per cent to 18.45 per cent.

As per this revised tax rate, for 10 gm of gold valued at Rs 1,50,000, the tax incidence will go up by Rs 13,906. In the earlier duty regime, the total rate after the taxes would have been Rs 1,63,769. In the revised rate, it would go up to Rs 1,77,675.

The government has increased the basic customs duty and AIDC of platinum as well. The 5.4 per cent BCD on platinum has increased to 10.4 per cent and AIDC from 1 per cent to 5 per cent.

On Monday, Prime Minister Narendra Modi had asked the people to stop buying gold for one year to reduce the import bill. In FY2026, India imported nearly $72 billion worth of gold, around 24 per cent higher than the previous year. Silver imports crossed $12 billion, with 150 per cent annual increase.

According to industry, the hike in import duty will lead to increased smuggling and higher imports under Free Trade Agreement.

Under the trade deal with the UAE, India can import a fixed quota of gold at a duty 1 per cent less than MFN duty. The quota will keep rising from 120 tonnes annually in 2022 to 200 tonnes by 2027. After the duty revision to 15 per cent, this gold can be imported at 14 per cent.

Similarly, import duties on silver will come down to zero over a ten-year period beginning in May 2022. The concessional tariff on silver imports from the UAE currently stands at 7 per cent. “With India now raising the general tariff to 15 per cent, the duty gap has widened to 8 percentage points, creating a major arbitrage opportunity for imports routed through Dubai. That margin is scheduled to widen further each year until CEPA tariffs fall to zero by 2031,” finds GTRI. END