Budget 2026: Gold has seen one of the strongest price appreciations in the current times, driven by a cluster of factors, including the US dollar debasement, Central banks’ hoarding, and macro-economic
uncertainty triggered by geopolitical tensions.
Before yesterday’s fall, the gold prices jumped by over 90 per cent in the past year, the strong-performing asset after silver.
According to the Economic Survey 2025-26, which was tabled on January 29, investors have shifted to safe-haven assets such as gold amid a weakening US dollar, global uncertainty, negative real rates, and rising geopolitical and financial risks.
“Global policy uncertainty increased following the announcement (US tariffs), prompting investors to reduce their exposure to the US Dollar (USD) and seek safe-haven assets, such as gold,” the survey added.
The high demand has led to a 27.4 per cent year-on-year rise in gold imports in FY25, driven by strong domestic consumption and rising gold prices, the survey said.
Gold has remained the major import item in FY25 after petroleum crude. The survey also highlighted that the gold component in Foreign Currency Assets (FCA) rose sharply to USD 117.5 billion as of 16 January 2026, compared with USD 78.2 billion at the end of March 2025. This increase reflects both valuation gains during a period of elevated global gold prices and a continued preference among central banks for diversifying into non-dollar reserve assets, it added.
What Is Current Custom Duty On Gold?
The current effective duty on imported gold such as bars, coins and jewellery is around 6 per cent, which was slashed from 15 per cent in Budget 2024-25.
Import tax on gold doré was also sharply reduced, falling from 14.35% to 5.35%. Alongside this, taxation on gold investments was eased, with long-term capital gains (LTCG) lowered from 20% with indexation to 12.5% without indexation, and the holding period shortened. Together, these moves significantly improved gold’s appeal as an investment asset.
With the Budget 2026 is around the corner, expectations are pinning that the government may tweak custom duty on gold. Moreover, the high US tariffs have impacted the gold and jewellery sector in India brutally, because of its high reliance.
Expectations From Budget 2026
The Gem and Jewellery Export Promotion Council said the global gem and jewellery trade is undergoing a structural transformation, driven by higher US tariffs, evolving consumer demand, and shifting supply chains. GJEPC chairman Kirit Bhansali said India must safeguard its competitive edge amid these changes.
According to Bhansali, the Council’s proposals focus on improving cost efficiency, strengthening Special Economic Zone (SEZ) operations, and refining policy frameworks that support investment and skill development. He added that stable trade policies and supportive reforms could help India withstand current global headwinds while driving the next phase of growth in the international jewellery market.
Safe Harbour Tax, Import Duties Under Review
Among its key concerns, the GJEPC highlighted the existing 4% Safe Harbour tax, arguing that it remains too high and discourages international trade. The Council has also called for rationalisation of import duties on cut and polished diamonds as well as coloured gemstones, a move it says is critical for maintaining export competitiveness.
In addition, the GJEPC has sought amendments to the Customs Act, 1962, to align procedures with the needs of a fast-evolving, export-oriented sector. Suggested measures include risk-based customs clearance, AI-enabled digital appraisals, and self-certification for trusted exporters to improve efficiency, transparency, and turnaround times.
Domestic Council Pushes GST, Tourist Refund Reforms
Separately, the All India Gem and Jewellery Domestic Council has made its own representation focusing on GST rationalisation, hallmarking, and direct tax reforms. GJC chairman Rajesh Rokde said GST on gold and silver jewellery should be reduced to 1.25% from 3% to ease household financial stress and broaden the tax base.
The Council has also proposed exempting capital gains tax on exchanges of hallmarked jewellery when sale proceeds are reinvested in new purchases. Additionally, it urged early operationalisation of the Tourist GST Refund scheme, recommending a phased pilot at Delhi, Mumbai, and Bengaluru airports to support foreign tourist demand.
