GST Council may end tax exemptions on gold and silver imports

The GST Council may consider a proposal to withdraw the Integrated Goods and Services Tax (IGST) exemption currently granted to banks and designated agencies for the import of gold, silver, and platinum. The council is expected to deliberate on this matter during its meeting on October 7.

Currently, a 3% IGST applies to the import of these precious metals, but banks and government-listed agencies are exempt. This exemption was originally introduced in 2017 to facilitate easier trade when imports were more strictly controlled. Removing the exemption would bring these agencies on par with the bullion market regarding taxation.

The government has expressed concern over precious metal imports due to their impact on foreign exchange reserves. India is the world's second-largest consumer of gold, driven largely by jewelry demand. To curb non-essential imports, the government previously increased import duties on gold and silver from 6% to 15%, and on platinum from 6.4% to 15.4% in May.