Gold Import Tax Row: Banks Restart Shipments After Paying IGST, Govt to Issue Fix Soon: Reportli

The central government is preparing a corrective order to resolve confusion over a recent notification that unintentionally affected a long-standing tax exemption for gold-importing banks, according to the India Bullion and Jewellers Association (IBJA), as reported by ET Online.

Centre Plans Rectification Order to Fix IGST Rules on Gold Imports

The issue emerged after a regulatory change led to uncertainty around the tax treatment of gold imports. As a result, customs authorities began asking banks to pay 3% Integrated Goods and Services Tax (IGST) on imported gold shipments-something that was previously exempt for authorised banks.

Banks Resume Gold Imports After Paying IGST

Despite the temporary confusion, importing banks have now restarted clearing gold shipments by paying the 3% IGST upfront. This step has helped restore the supply flow of gold to jewellery manufacturers and retailers, preventing a deeper shortage in the domestic market.

IBJA National Secretary Surendra Mehta told ET Online that the situation is expected to be resolved soon. According to him, government officials are working on a rectification order that is likely to be issued within the next 48 to 72 hours, aimed at restoring the earlier tax-exempt status for bank-led gold imports.

GoodReturns has also reached out to the India Bullion and Jewellers Association (IBJA) for further comments on the ongoing developments, and the response is awaited.

Impact on jewellers: Rising Gold Costs Disrupt Jewellery Sales and Buying Trends

The short disruption had already begun affecting smaller jewellers before imports resumed. With supply tightening, wholesale gold prices reportedly rose by around Rs 1,200 per 10 grams, increasing sourcing costs for retailers.

However, many jewellers were unable to fully pass on these higher costs to customers, especially in a price-sensitive market. This led to pressure on profit margins and also influenced buying behaviour, with consumers shifting towards lighter and lower-carat jewellery.

A Delhi-based jeweller noted that customer spending patterns have changed noticeably. Average purchase values have dropped significantly as buyers move away from heavier 22K jewellery towards more affordable 18K and daily-wear designs.

Banks play a key role in India's gold supply chain, as they import most of the refined bullion used in the domestic market. The issue began when customs authorities started enforcing IGST on these imports due to delays in formal government notification updates.

Under the GST framework introduced in 2017, bank-led gold imports were originally exempt from this 3% tax. However, due to a procedural gap in recent notifications, clarity around this exemption was temporarily lost, leading to the disruption.

To maintain continuity in supply, banks have temporarily agreed to pay IGST while importing gold, ensuring that jewellery manufacturers and retailers continue receiving stock.

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