Custom Duty On Gold Rates Calculation: Gold Duty Hike To Push Gold Prices Higher: How Much Tax Will Be On Gold

The government more than doubled the import duty on gold to 15% from the earlier 6%, which is likely to hurt the jewelry trade. The All India Gems and Jewellery Council (GJC) said the move could spur the grey market. An all-association meeting has been called on Wednesday to discuss the latest impact and further course of action. The customs duty hike stems from the West Asia crisis, which has impacted global trade severely. The situation is still fragile in the Middle East and a gold duty hike is expected to remain till then. That being said, here's how much tax will be imposed on gold.

Customs Duty Hike On Gold:

The government increased basic customs duty on gold to 10% along with hiking Agriculture Infrastructure and Development Cess (AIDC) to 5%. This takes the total customs duty to 15% on the bullion.

Gold duty is hiked after more than two years. In Union Budget 2024, the government reduced customs duties to 6% on gold from 15%. That time, macro conditions were comfortable.

However, current macroeconomic conditions are challenging; the IMF expects India's current account deficit (CAD) to widen to $84.5 billion in 2026, which is 2% of total GDP.

Why Is Customs Duty Hiked On Gold?

A widening in CAD means India is spending more foreign currency on imports rather than earning it on exports. India's total imports stood at $775 billion in FY25-26, out of which gold imports account for 9.29% to $72 billion in the year.

India is the second largest consumer of gold in the world with 711 tons in 2025, as per World Gold Council data. However, most of India's gold is imported and exchanged in dollars. The USD is currently above 98 but it had crossed above the 100.55 mark by the end of March 2026, due to the US-Israel-Iran war.

The WGC report said gold imports averaged 83 tons in the first two months of 2026, well above the 2025 monthly average of 53 tons, largely supported by strong investment demand during January. The late-February geopolitical developments in the Middle East and the related logistical disruptions to gold shipments by the UAE - a key gold import route for India-impacted bullion imports in March. Imports in Q1 at 186 tons were up 58% yoy.

Hence, the government is encouraging Indian citizens to avoid gold for least 1 year. The customs duty hike is along those lines.

During the weekend, Prime Minister Narendra Modi said, "Gold purchases are another area where foreign exchange is used extensively. In the national interest, we must resolve not to purchase gold for a year."

Here's How the Customs Duty Impacts Gold: Check Full Calculation!

For instance, if gold worth Rs 100,000 is imported:

Base Value: Rs 100,000

Basic Customs Duty: 10% of Rs 100,000 = Rs 10,000

Agriculture Infrastructure and Development Cess: 5% = Rs 5,000

Total Customs Duty will be Rs 15,000.

Then apply cess on customs duty: 10% of Rs 15,000 = Rs 1,500

India has been taking measures to curb the impact of gold imports in recent weeks. Accordingly, a 3% integrated goods and services tax (IGST) is levied on this precious metal.

So then add the 3% ISGT on the total gold, which comes to around Rs 3,495.

Hence, the final price for gold will be Rs 118,495.

Comparison of old vs. new customs duty on gold:

	Old Basic Duty Impact		New Basic Duty Impact
Particulars	Rate (%)	Value (Rs.)	Rate (%)	Value (Rs.)
Total Tariff (Base Value)	-	100000		100000
Basic Duty	5	5000	10	10000
Agriculture Infrastructure and Development Cess	1	1000	5	5000
Subtotal		106000		115000
IGST	3	3,180	3	3495
Final Price		109180		118495

This is likely to push gold prices higher.

How Will a Customs Duty Hike Impact Gold Rates?

According to GJEPC, the latest hike could push gold rates higher. In a statement, GJEPC said, "Despite gold prices doubling recently, imports have not declined proportionally. Such measures often fuel smuggling and escalate export costs."

The latest hike has already sparked enormous upside in gold rates in India. For instance, on May 13, 24 carat gold price skyrocketed by Rs 13,910 to Rs 167,890 per 10 grams, while 22 carat gold price climbed by Rs 12,750 to Rs 153,900 and 18 carat gold surged by Rs 10,430 to Rs 125,920 in 10 grams.

Meanwhile, Suvankar Sen, MD & CEO, Senco Gold, said, "he duty would remain high till the Middle East crisis remains, crude oil prices remain high and the oil supply chain becomes stable. So, maybe around one year it shall stay at these levels."

Sen added that volumes might decrease by 10-15 percent but the value will remain high. Consumers will buy lighter weight jewellery."

GJEPC has sought a meeting with major retailers and manufacturers. GJEPC is proposing several measures that could reduce imports following the PM's appeal. Key proposals include promoting lower-carat golds such as 18 carat and 14 carat along with encouraging consumers to exchange old gold for new jewelry. This is believed to revive the gold monetisation scheme.

In GJEPC's opinion, promoting lower-carat jewellery could potentially reduce gold imports by 20-30%.

How Much Gold Is Duty Free?

For male passengers (Beyond 20g, capped at a ₹50,000 limit)
3% - 20 grams to 50 grams
6% - 50 grams to 100 grams
10% - over 100 grams
For Female Passengers (Beyond 40g, capped at a ₹1,00,000 limit)
3% - 40 grams to 100 grams
6% - 100 grams to 200 grams
10% - over 200 grams

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