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India's Gold Imports Resume After Tax Dispute
12 May
Summary
- Banks restarted gold and silver imports after a month-long pause.
- A 3% integrated goods and services tax was the cause of the halt.
- Imports resumed after banks agreed to pay the new tax.
Indian banks have recommenced importing gold and silver after a hiatus exceeding a month. The cessation of shipments stemmed from a disagreement over a 3% integrated goods and services tax (IGST). Banks, which are major contributors to India's refined gold imports, had stopped all new shipments from April 1.
Following customs authorities' demand for IGST payments on bullion imports, banks initially paused their activities. This tax had typically been waived for gold-importing banks since the IGST regime began in 2017. However, with the government signaling its intent to reduce gold imports, banks have now agreed to pay the 3% IGST to clear pending consignments.
Recent days have seen banks clearing approximately 9 metric tonnes of gold and 34 metric tonnes of silver imports in May, after paying the required tax. This resumption is expected to ease domestic supply tightness, although current demand remains subdued, leading to gold trading at a discount. Analysts anticipate that increased buying from India could support global gold prices.
