India’s connection to gold goes beyond money; it’s cultural, emotional, and deep. That’s why every change to the gold import duty India impacts prices, demand, smuggling, and even the country’s trade numbers. The customs tariff on gold was cut from 15% to 6% in the Budget 2024; this adjustment to the duty on gold import in India marked the lowest level in over ten years. The updated gold import duty in budget 2025 maintained this rate, continuing to influence India’s gold market significantly. To better understand the implications of these changes for consumers, investors, and the economy, let’s get more details on the gold import tax and its historical development.

What is the gold import duty, and why does India charge it?

A gold import duty is a tax on gold that comes into India. It is used by governments to-

• Protect industries at home, even though India doesn’t make much gold on its own.
• Maximize profits.
• To deal with gold’s effect on the trade imbalance, control demand.

Import duties stayed over 10% from 2012 to just before Budget 2024, reaching a high of 15%. This made gold expensive in the country and led to smuggling and illegitimate imports.

An Important Policy Change in the 2024 Budget

The government reduced the gold import duty India to 6% in July 2024, which was the lowest level since 2013. The tax on gold doré also went down from 14.35% to 5.35%. At the same time, long-term capital gains on gold were taxed favorably: they went from 20% with indexation to 12.5% without indexation and a shorter holding period, making gold a more appealing investment.

Current effect:

• Even though gold prices have gone up about 18% this year everywhere, the cost of landing has gone down about 6%.
• Dealers said that demand for bars and bullion has gone up by 15% to 40%.
• With a 221% increase from July to August 2024, gold imports reached US$10 billion, indicating a growth in demand.

Prices Drop and Demand Rises

When the gold import duty India was lowered in the Budget 2024, it greatly affected pricing and market activity in the short term. In late June 2025, the price of 24K gold at retail stores fell by about ₹600 to ₹700 per 10 grams, which was good news for buyers immediately. But this drop in price hurt jewellers’ profit margins for a short time because they retained stock that they had bought at higher duty rates. 

Fortunately, margins stayed the same while prices increased again in response to higher demand, during the festivals, especially Dussehra and Diwali, gold imports shot up by an incredible 221% in August 2024. Interestingly, although overall bullion imports increased, official bullion imports only rose 8% in FY25. This indicates that smuggling may have decreased because the import duty structure is more beneficial.

Also Read This: India’s Non Basmati Rice Exports: Growth, Demand, and Strategy

New Ways of Smuggling

Even though official outlets saw more of it, Smuggling didn’t go away. Barter smugglers traded food for gold because there were big differences in taxes between India and Bangladesh.

ICRA also says that lower customs duties made it easier for people to import goods legally instead of through the illegal market. 

A Method for Improving the 2025 Budget

The budget for 2025, which was announced on February 1, 2025, kept the duty on gold import in India at 6%, but it decreased the tax on jewelry parts from 25% to 20%. DGFT also changed CEPA’s import rules to match changes in the budget, making it harder to import gold through legal means.

Small jewelers, notably in Ahmedabad, objected to TRQ quotas that weren’t clear, saying that the requirement for a turnover of Rs 25 crore made it easier for big companies to do business than for small ones.

Bigger Effects on Trade and Currency

India’s current account is substantially affected by gold imports, which usually total more than $50 billion a year. The 6% gold import duty India cut was meant to increase trade and cut down on smuggling, but it also created worries about the trade deficit getting bigger.

High demand for gold, due to festivals and rising rural incomes, along with more legal imports, might make gold a more common trade item, which could put pressure on the currency and external balances.

Who wins, and who should be careful?

There are clear winners and certain people who need to be wary when the gold import duty India is reduced. Customers get better deals and lower prices, and formal trade channels get more business. It also makes it easier for smaller investors to get to gold. 

However, big importers have a hard time adapting to unexpected changes in policy and stricter Tariff Rate Quota (TRQ) rules. There are also worries that official imports could make the fiscal deficit worse. Smuggling may go down, but it could also change into newer, harder-to-track forms instead of going away completely.

Wrapping It Up

India’s buying and investing in gold has changed since the import duty on gold was lowered. Lower pricing, more demand, and easier legal trade have all been good for both buyers and businesses. There are still problems, though, especially for small jewelers and policymakers who have to keep commerce and currency in balance. The potential growth of India’s gold market depends on beneficial rules and equal access for everyone, as the gold import duty in Budget 2025 helps keep prices low and encourages formal trade.

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