Govt withdraws key bank tax benefit on gold, silver and platinum imports

The GST Council withdrew Integrated GST (IGST) exemption benefit on gold, silver and platinum imports by banks and nominated agencies, subjecting shipments to a 3% levy and raising costs for the main channels supplying one of the world’s largest bullion markets, as per a Bloomberg report.

The government did not extend the exemption from paying IGST for precious metals imported through banks beyond March 31, Revenue Secretary Arvind Shrivastava told reporters in New Delhi on Thursday. The move puts all gold and silver import routes on an equal tax footing.

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The decision was implemented starting April 1, so that “we do not have tax becoming a reason for one route being preferential to another” Shrivastava said, adding that the GST council was informed about it at the meeting on Thursday.

Some importers have already been paying the tax since over the last few months, after the government allowed a list of exemptions to expire. The Directorate General of Foreign Trade later issued a new list of authorised importers on April 17, but the tax exemption notification was not updated.

The waiver, introduced for gold in 2017 and later extended to silver and platinum, spared importers from paying IGST. The relief was designed to ease the flow of bullion through approved traders.

India tightly controls who can bring gold into the country, said Bloomberg. Most shipments arrive through authorised banks and nominated agencies, while eligible jewellers can import through the India International Bullion Exchange. The levy will tie up more working capital for these importers.

(With inputs from agencies)