Gold Duty Cut Bringing Down Unofficial Imports: Icra

Tue June 24 2025

Noting that the import duty rate cut on gold from 15 per cent to 6 per cent has seemingly brought down unofficial gold imports, Icra has stated that this is evident from an increase in official gold bullion imports by around 8 per cent in the fiscal year 2025, despite overall demand remaining flat.

Icra noted that the sharp reduction in import duty rates resulted in a decline in gold prices in the domestic market and, consequently, the landed cost. The demand for gold jewellery improved to some extent immediately after the duty cut due to reduced gold prices.

“However, gold prices continued to rise subsequently on the back of geopolitical tensions and apprehension of tariff imposition by the United States, partially offsetting the impact of duty cut on gold prices,” Icra added.

Highlighting that duty action on gold has a considerable influence on the country’s current account position, the report noted that increasing import duties on gold can reduce gold imports and help lower the current account deficit and vice versa.

“With the introduction of the Goods and Services Tax (GST) in 2017, the overall duty/tax rate increased to 13 per cent from 12 per cent. Major action was undertaken in the Union Budget 2023 wherein the total customs duty was increased by 425 basis points,” the report added.

In the Union Budget 2025, total customs duty on the import of gold was reduced by 900 basis points (6 per cent from 15 per cent) with effect from 24 July 2024. For gold ore, the revised rate was 5.35 per cent. Icra mentioned that the revised duty rates are the lowest in the past decade. As per the report, platinum and silver bars also witnessed a similar duty cut of 900 bps to 6.4 per cent 6 per cent, respectively.

Source: https://www.businessworld.in