import duty on goldImage Credit source: AI
After Prime Minister Narendra Modi’s appeal not to buy gold for a year, the Indian government itself has decided to curb imports. Last night the government increased the duty on other precious metals including gold to 15 percent. Earlier the total import duty on gold was 6 percent. Now it has increased to 15 percent. Let us understand with the help of this news how much tax benefit the government will get by increasing the import duty on gold. What will be its impact on imports?
The Government of India had made a huge cut in the gold import duty in the Budget 2024-25 to stop illegal smuggling of gold. After the cut, Basic Custom Duty was reduced to 5 percent and Agriculture Infrastructure and Development Cess was reduced to 1 percent. But now the government has again increased both of them. After May 13, 2026, BCD increased from 5 percent to 10 percent and AIDC increased from 1 percent to 5 percent. That means the total import duty became 15 percent.
India’s total gold import
If we look at the figures, in the last financial year 2025-26, India imported $71.98 billion of gold out of its total imports of about $775 billion. Gold import was about 9 percent of the total import. According to this, if the total tax was 6 percent, then India would have earned approximately 4.32 billion dollars from it. If now the duty will be 15 percent, then according to this tax, India will get about 10.797 billion dollars. But this is just a guess. There is every possibility that the story will turn upside down. Because whenever import duty increases, there is a decline in imports also. Due to this, there will also be a decline in tax earnings.
Will there be a reduction in imports, will earnings also be less?
If the import duty is increased from 6 to 15 percent, if the import data remains the same, then the government can get additional revenue of about 6.5 billion dollars. But the possibility of this is less. Due to increase in import duty, gold may become expensive and the quantity of imports may also decrease. Let us explain to you the complete mathematics of earning through some examples.
If we assume that there will be no decline in imports, then the earning from 15 percent duty can be $ 10.8 billion as of now. But if there is a 10 percent decline in imports and it remains around $64.78 billion, then the additional revenue can be $9.72 billion. Apart from this, if there is a decline of 15 percent then the revenue can be around 9.17 billion dollars. At the same time, if there is a huge decline of up to 20 percent in imports, then the revenue will be around Rs 8.64 billion.
