Decode Civils CAShorts
Current affairs Open app
EconomyGS3Prelims

Gold imports by banks lose GST exemption, attract 3% IGST

By CAShorts DeskPublished Updated Source: The Hindu

Gold imports by banks lose GST exemption, attract 3% IGST
Illustration (AI-generated)

Gold, silver and platinum imported by banks and nominated agencies have attracted 3% Integrated Goods and Services Tax (IGST) since April 1, 2026, Revenue Secretary Arvind Shrivastava said on October 8. The Government informed the GST Council that the exemption list was not extended beyond March 31. Import duty on gold and silver rose from 6% to 15% in May.

Syllabus: GS3 · Indian Economy & Growth; GS3 · Government Budgeting; Prelims · Economy & Social Development

Why it matters

A family planning to buy wedding jewellery is the real target of these steps. Until March 31, 2026, banks and nominated agencies brought in gold, silver and platinum without paying IGST at customs; now they pay 3% up front, like any other importer. The heavier cost is the import duty, raised to 15% in May to curb non-essential imports, which makes imported gold dearer for every buyer. Each gold bar India imports is paid for in dollars, so a large import bill raises the demand for dollars and pulls the rupee down. A weakening rupee, in turn, makes fuel and other essential imports costlier for everyone. The larger question is how a country that loves gold can keep that demand from straining its external accounts.

Prelims pointers

  • Article 269A: the Centre levies and collects GST on inter-State supplies and shares it with the States; an import into India is deemed an inter-State supply.
  • Integrated Goods and Services Tax Act, 2017: Parliament's law for IGST on inter-State supplies and imports; within a State, Central GST and State GST apply instead.
  • Customs Tariff Act, 1975: IGST on imported goods is collected under it, at the point where customs duty is charged under the Customs Act, 1962.
  • Customs duty: a Union List tax on imports and exports. Basic customs duty stayed outside GST; IGST replaced the countervailing duty and special additional duty on imports.
  • Goods and Services Tax Council: constitutional body under Article 279A, added by the Constitution (101st Amendment) Act, 2016; the Union Revenue Secretary is its ex-officio Secretary.
  • Input tax credit: a registered business can set off IGST paid on imported goods against the GST due on its own sales; customs duty cannot be set off.
  • Current Account Deficit: arises when payments for imports of goods and services, income and transfers exceed receipts; gold counts under merchandise imports.
  • Sovereign Gold Bond Scheme and Gold Monetisation Scheme (2015): launched to cut demand for physical gold and put idle gold to use; the Reserve Bank of India issued the bonds.

Practise a UPSC-style question

With reference to the Integrated Goods and Services Tax (IGST), consider the following statements:

1. It is levied and collected by the State in which the goods are finally consumed.

2. The Constitution treats the import of goods into India as a supply in the course of inter-State trade or commerce.

Which of the statements given above is/are correct?

  1. (a) 1 only
  2. (b) 2 only
  3. (c) Both 1 and 2
  4. (d) Neither 1 nor 2
Show the answer

Answer: (b) 2 only

1 is incorrect: under Article 269A, IGST is levied and collected by the Government of India and then apportioned between the Union and the States; the consuming State gets a share but does not levy the tax. 2 is correct: Article 269A deems a supply in the course of import into India to be an inter-State supply, which is why imported gold pays IGST.

More from the 9 October 2026 edition

All stories of 9 October 2026

More Economy current affairs