Gold prices have shot through the roof (nearly 30% higher than last year), and the government charges heavy taxes on official purchases—a 15% import tax plus a 3% GST tax. Because of this, buying gold legally comes with a massive extra cost.

Cash deals mean huge discounts

To avoid these high taxes, many local jewelers and buyers are skipping the paperwork entirely. Buying gold with cash off-the-books means no official receipts and no paper trail.

For regular shoppers: People buying wedding jewelry can save anywhere from Rs 5,000 to Rs 10,000 for every 10 grams just by paying cash without a bill.

For big buyers & traders: Bulk shoppers can save up to 6% off normal market prices. Unofficial suppliers are even managing to snag gold at discounts up to $200 an ounce—dwarfing the typical $50 discount seen through legal channels. As industry experts note, when import taxes are this high, it creates a massive incentive for gold to sneak past official channels.

Government rules backfired

The government raised taxes on gold to discourage people from buying imported metal, trying to keep money inside the country. Instead, it pushed the market underground. When taxes were low (around 6%), people didn’t mind paying legally. Now that taxes are at 18% total, dodging them is too tempting to pass up.

The timing couldn’t be worse

India’s massive wedding and festival season runs from mid-October to March, which is when gold buying spikes. With gold being a mandatory part of gifts and savings for Indian families, shoppers are prioritizing savings over receipts—making the illegal cash trade boom like never before