Centre working to restore gold import tax exemption for banks; shipments resume after IGST glitch
The central government is working to rectify a technical oversight in a recent notification that inadvertently withdrew a long-standing tax exemption for gold-importing banks, as per India Bullion and Jewellers Association (IBJA). Government officials are working on a "rectification order" to be issued within the next 48 to 72 hours, Surendra Mehta, National Secretary, IBJA, told ET Online.
Meanwhile, importing banks have resumed operations to keep the supply flowing. Rather than waiting for the government’s amendment, banks began clearing gold shipments on Wednesday by paying the 3% IGST (integrated goods and services tax) upfront, ensuring that jewelry manufacturers and retailers have access to the metal they need.
"All importing banks have resumed clearing gold shipments as of yesterday by paying the 3% IGST. We understand the Commerce Ministry is working to rectify the current notification within the next 2-3 days to restore the previous tax-exempt status for bank imports," said Mehta.
The temporary freeze had already started hurting the small jewellers.
Without bank shipments, the cost of sourcing gold jumped by as much as Rs.1,200 per 10 grams. Retailers found themselves unable to pass these costs onto customers, leading to thinner profit margins and a shift toward lighter, lower-carat products to keep sales moving.
