What changed for gold and silver in the last five Union Budgets, and how customs duty impacts precious metals

The recent discussions on gold and silver, amid skyrocketing prices, often miss one important aspect that significantly affects India’s precious metals market: the customs duty. Customs duty is the tax that governments levy on goods crossing international borders (imports and exports) to generate revenue and protect local players. 

Import tax on gold and even silver highly influences their prices in India. The tax on importing the precious metal affects the cost of jewelry, which in turn impacts its demand, as gold is more than just a metal; it is crucial in religious ceremonies and weddings across the country. 

This means that any change in customs duty can have a direct impact on gold and silver prices.  

Importantly, India heavily relies on gold imports to meet the demand for the precious metal. In October 2025, near Diwali, India’s gold imports surged to a record high of $14.72 billion, according to commerce ministry data. 

Gold is significant in the country not just as an asset, but it has traditional value as well, which is why India has a high demand for gold, with little to no production capacity. This makes changes in customs duty even more important for gold and silver prices in India.  

Remember: High customs duty, high gold and silver prices, and vice versa. 

Now, the central government sets the customs duty, which is key for India’s economy, through the Union Budget. Import/export taxes are proposed and revised by the Finance Minister in the Union Budget every year, and the changes (if any) are announced during the Budget speech. 

With the Union Budget 2026 approaching, scheduled for February 1, 2026, investors are wondering if there will be any important announcements regarding the precious metals that can influence bullion prices. Let’s look at the important announcements regarding gold and silver made in the last five years during the Union Budget presentation:

Customs duty announcements on gold and silver

Importantly, the centre also introduced an Agriculture Infrastructure and Development Cess (AIDC) of 2.5% on the import of specified goods, including gold and silver bars. Overall, the tax incidence decreased on precious metals. 

"Customs Duties on dore and bars of gold and platinum were increased earlier this fiscal. I now propose to increase the duties on articles made therefrom to enhance the duty differential. I also propose to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum," Finance Minister Nirmala Sitharaman said in her Budget speech on February 1, 2023.

In October last year, a Reuters report quoted Customs and Directorate of Revenue Intelligence (DRI) officials saying that smuggling had increased in recent weeks. 

If the government cuts the customs duty on gold and silver again this year in the Union Budget 2026, gold prices could fall in India. However, the impact might not last for very long, as gold and silver prices are heavily influenced by trends in the global markets. 

Other developments

In Budget 2021, the government said that the Securities and Exchange Board of India (SEBI) will be the designated regulator for gold exchanges. The move was aimed at establishing a transparent and efficient gold exchange in India, facilitating the introduction of Electronic Gold Receipts (EGR).

"In the budget of 2018-19, the Government had announced its intent to establish a system of regulated gold exchanges in the country. For this purpose, SEBI will be notified as the regulator, and Warehousing Development and Regulatory Authority will be strengthened to set up a commodity market ecosystem arrangement, including vaulting, assaying, logistics, etc., in addition to warehousing," FM Sitharaman said in the Budget speech on February 1, 2021.

Later in 2023, FM Sithraman clarified that the conversion of physical gold to Electronic Gold Receipt (EGR) and vice versa will not be treated as a transfer, meaning that it would not attract any capital gains tax.

"The conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains. This would promote investments in the electronic equivalent of gold," she said.

Gold and silver’s unending rally

Gold and silver have been attracting widespread attention in both domestic and international markets consistently for over six months now due to rising prices. Precious metals tend to gain during periods of uncertainty, as investors shift to safer assets during volatility. In 2025, gold and silver advanced due to rising geopolitical issues, tariff and trade war concerns, market fluctuations and falling currencies. 

Even since the start of this year, the metals have grown tremendously due to added geopolitical concerns, including the US President’s actions against Venezuela, threats to control Greenland, EU tariffs and tensions in Iran.

On Thursday, January 29, gold futures for February expiry hit a lifetime high of ₹1,80,779 per 10 gram on the Multi Commodity Exchange (MCX). Compared to January 1, 2026, the contracts have risen over 31%.

Meanwhile, silver futures hit a record high of ₹4,08,487 per kg on Thursday, marking an increase of nearly 71% in January 2026.

Gold and silver touched fresh peaks in the international markets, extending the bull run. Gold futures on the Comex surpassed the crucial $5,600 per ounce mark for the first time on Thursday, increasing to $5,626.8 per ounce. Comex silver futures jumped to a new record high of $119.51 per ounce.