Gold imports by nominated agencies may come under GST as Council weighs tax parity

The matter is expected to come up at the October 8 GST Council meeting, with the broader proposal aimed at aligning the tax treatment of bullion imported through banks, nominated agencies and exchanges.

Kolkata: Government agencies such as MMTC and State Trading Corporation of India may soon come under the goods and services tax (GST) regime for gold and precious metal imports, as authorities seek to bring different import channels on an even footing and reduce classification and valuation disputes that have led to prolonged litigation.

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The matter is expected to come up at the October 8 GST Council meeting, with the broader proposal aimed at aligning the tax treatment of bullion imported through banks, nominated agencies and exchanges. At present, banks and certain nominated agencies have to pay 3% GST when they import precious metals.

The move could effectively end the preferential treatment extended to certain agencies since 2017, when gold, silver and platinum imports were tightly channelled through a few banks and nominated agencies. Since then, the bullion exchange route has developed, with duty and tax being paid through the new channel.

Renisha Chainani, chief research officer at Augmont, said removing the exemption would provide a level playing field across import channels. "The 2017 exemption made sense when only a few banks and nominated agencies brought bullion into India. Now that bullion exchanges offer another route, everyone should follow the same rules on duty and tax," she said.

In the near term, however, banks and nominated agencies could see their bullion imports moderate as upfront tax payments increase their working-capital requirements and squeeze margins, Chainani said. This could temporarily widen local premiums and slow bullion supplies to jewellers.

"Over time, though, more trade should shift to the exchanges, and gold pricing should become more transparent and better organised," she said.

The proposal also seeks to address the operational complications that would arise when classification codes change in the budget but corresponding tariff notifications are not aligned, industry executives said. Such gaps have resulted in disputes over whether a change applies to the goods or merely to their classification.

Bringing the routes onto the same tax footing could therefore reduce interpretational disputes while making bullion sourcing more transparent and efficient for jewellers.