Just before the beginning of the festive season, gold prices have broken all its previous records and are touching new highs. The demand for gold is expected to increase rapidly in the coming festive season, due to which its prices may rise further. However, to control the rising prices in the market, the government is now seriously considering reducing the import duty again.
In the month of May this year, the government had increased the import duty to 15 percent to ban the import of gold and silver and to manage the foreign exchange reserves. Now preparations are underway to reduce it back.
Why can import duty be reduced? efforts to stop smuggling
Three prominent sources related to the matter say that after the increase in import duty on gold and silver, the business of illegal gold smuggling has increased rapidly in the country. To avoid heavy tax burden, traders are using illegal routes, which is directly affecting the market prices.
Although no final official decision has been taken yet regarding reducing the import duty, it is believed that the government can provide this big relief to the common consumers during festivals. Bullion traders and jewelers have also been demanding for a long time that the import duty should be reduced from 15 percent to 6 percent.
Why did the government increase the import duty in May?
The government had taken this drastic decision in view of its increasing oil import bill and decreasing dollar reserves. On May 13, 2026, the import duty on gold and silver was increased from 6 percent to 15 percent. Immediately after this decision, the demand for gold and silver in the Indian market decreased, which reduced the expenditure on imports from foreign exchange reserves.
At that time, precious metals were also soft in the global market, but now gold has again gained momentum. In the retail market, the price of gold has reached close to Rs 1.65 lakh per 10 grams. In view of this sharp rise in prices, the government is now planning to reduce the import duty, so that there is not much burden on the pockets of common people during festive shopping.
There will be a ban on jewelery export and gold smuggling
Industry experts say that India is the world's largest gold importer, where about 800 tonnes of gold is imported every year. There is also a huge export of ready-made jewelery from India to international markets like UAE, Thailand and Singapore.
When import duty increases in the country, illegal smuggling not only increases, Indian jewelery sent abroad also becomes expensive. Due to this, both retailers and customers of the domestic market have to bear the direct loss.
Gold import increased rapidly in the country
Gold imports in India jumped by 82 percent during April 2026. Due to such large-scale imports, there was a lot of pressure on the country's foreign exchange reserves, after which the government had to take strong intervention. Even PM Modi had appealed to the countrymen to reduce the purchase of gold.
The impact of increased tariffs was visible in May and the growth rate of gold imports came down to 34 percent. After this, in the two months of June and July, gold import increased by 5.5 percent to $ 6.13 billion, whereas in the same period last year this business was $ 5.81 billion.
How much cheaper will 1 tola gold become?
At present 15 percent import duty is applicable on gold. Its simple mathematics is that if you import gold worth Rs 1 lakh from outside, then there is a tax of Rs 15,000 on it and the total price becomes Rs 1.15 lakh.
If the government reduces it back to 6 percent, then there will be a direct tax cut of 9 percent. For example, on Wednesday, August 26, the price of 24 carat gold in Lucknow was Rs 1,63,750 per 10 grams. If the import duty is reduced by 9 percent, then the price of 1 tola gold will come down to around Rs 1,50,935. That means customers will directly get huge savings of Rs 12,815 per 10 grams and gold can become cheaper by about 7.83%.