The central government is reportedly working on a corrective notification to address an issue that temporarily impacted tax treatment on gold imports by banks, a move that had disrupted supply flows and increased procurement costs for jewellers, as per India Bullion and Jewellers Association (IBJA).
According to The Economic Times reports, officials are preparing a rectification order expected to be issued within the next few days to restore the earlier tax treatment applicable to gold-importing banks.
The issue emerged after a recent notification inadvertently removed the long-standing exemption from the 3% Integrated Goods and Services Tax (IGST) on gold imports handled by banks.
Despite the uncertainty around the notification, importing banks have resumed clearing gold shipments by paying the applicable IGST upfront.
The move was aimed at preventing supply disruptions for jewellery manufacturers and retailers dependent on imported bullion.
Industry bodies indicated that banks resumed import clearances from Wednesday to ensure uninterrupted availability of gold in the domestic market.
The temporary halt in bank-led imports had started affecting jewellery businesses, particularly smaller retailers.
Industry participants stated that sourcing costs increased by nearly ₹1,200 per 10 grams during the disruption period, putting pressure on margins as retailers struggled to fully pass on higher costs to consumers.
Several jewellers also reported a shift in consumer demand towards lower-carat and lightweight jewellery products as buyers adjusted to elevated prices.
Retailers observed moderation in average transaction values as customers increasingly preferred affordable jewellery options over traditional heavier 22-carat products.
The higher procurement cost environment has also impacted pricing flexibility for smaller jewellery businesses operating in price-sensitive markets.
Banks account for a significant share of India’s refined gold imports.
When the IGST framework was introduced in 2017, banks importing gold were exempted from paying the 3% levy.
The recent disruption reportedly emerged because of delays linked to formal authorisation procedures for bullion imports.
India remains the world’s 2nd-largest gold consumer market with substantial monthly import requirements driven by jewellery demand and investment consumption.
Industry estimates suggest that gold import spending during April remained significantly below average levels despite festive buying demand during Akshaya Tritiya.
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The expected rectification order could help normalise bullion imports and ease supply-side pressures on jewellers after temporary disruption caused by changes in tax treatment for importing banks.
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Published on: May 9, 2026, 11:22 AM IST
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