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Heavy Taxes Drive Cash Gold Sales Surge

Heavy Taxes On Official Purchases—A 15% Import Tax Plus A 3% GST Tax Make, Buying Gold Legally Comes With A Massive Extra Cost

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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

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National News

Gold prices in India extend recovery on softer U.S. dollar, easing Treasury yields, lower crude oil prices.

Market participants attributed the firming metal prices to a pause in U.S. yield gains following strong demand at the latest 30-year U.S. Treasury auction, which relieved pressure on non-yielding assets.

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Gold prices in India extended their recovery on Saturday, with 24-carat gold climbing back above the 151,000 rupee mark per 10 grams, supported by a softer U.S. dollar, easing Treasury yields, and lower crude oil prices.

The domestic benchmark rate for 24K gold rose by 710 rupees, or approximately 0.47%, to 151,420 rupees per 10 grams. For bulk purchases, 100 grams of 24K gold stood at 1,514,200 rupees, up 7,100 rupees from the previous session.

Jewellery-grade 22K gold advanced by 650 rupees to 138,800 rupees per 10 grams, while 18K gold climbed 540 rupees to hit 113,570 rupees per 10 grams. Per sovereign (8 grams), 24K gold traded at 121,136 rupees and 22K gold at 111,040 rupees.

The rebound follows a volatile week for bullion. Over the past four sessions, 24K gold has climbed nearly 1.5%, gaining roughly 2,240 rupees from 149,180 rupees on Oct. 6. On the Multi Commodity Exchange (MCX), gold futures rebounded above 151,000 rupees after dipping toward the 149,000 rupee level earlier in the week.

In international markets, spot gold traded near $4,174.78 an ounce after recovering from $4,118.63 in the previous session and briefly breaching $4,200. International spot silver surged over 2% to trade around $60.40 an ounce, driving domestic silver rates in India to approximately 235,000 rupees per kilogram.

Market participants attributed the firming metal prices to a pause in U.S. yield gains following strong demand at the latest 30-year U.S. Treasury auction, which relieved pressure on non-yielding assets.

However, analysts warned that near-term gains may remain capped due to expectations surrounding Federal Reserve monetary policy.The key constraint is the Federal Reserve’s hawkish stance, with policymakers signaling that further tightening may be necessary to bring inflation back to target.

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