The Indian government has doubled the effective tax paid on the import of gold and silver to a total of 18.4% from the previous 9.2%, effective from May 13, 2026. It made the changes through two separate notifications issued late night on May 12.
Previously, the basic customs duty on gold and silver stood at 5%, with a 1% Agriculture Infrastructure and Development Cess (AIDC), and a 3% Integrated Goods and Services Tax (IGST) rate on the total assessable value of the imports, which includes the cost, insurance, and freight price, and the applicable basic customs duties, taking the effective import tax to about 9.2%.
Now, the customs duty has been hiked to 10%, and the AIDC has become 5%, taking the effective tax rate, including the IGST, to about 18.4%. The decision comes soon after Prime Minister Narendra Modi’s exhortations to the public to reduce gold purchases for at least a year, among other actions, to help protect India’s foreign exchange reserves and the rupee exchange rate.
According to industry players and experts, this “retrograde” and “blunt” decision will not only encourage a shift to smuggling, since the Indian appetite for gold is largely cultural, but will also have other negative effects on employment. The Ministry of Finance has not yet released an official statement on the duty hikes or its justifications. (The Hindu)
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