More Indian gold buyers are paying cash and skipping the bill, getting discounts of up to 6%, as high prices and a 15% import duty bite. The official market is losing new buyers at the same time.
At a glance
- Cash buyers who take no invoice can get up to 6% off the market price, dealers and traders say.
- India raised its import duty on gold to 15% from 6% on May 13, and jewellery also carries 3% GST.
- New gold ETF accounts fell from 12 lakh in January to about 4,000 in August.
Background
Gold sold legally in India carries two taxes: a customs duty when it is imported and a 3% goods and services tax (GST) when it is sold. A cash sale without an invoice leaves no record, so the seller can skip the tax and share part of the saving with the buyer. The wider the tax gap, the bigger the pull towards these unrecorded deals.
What is happening
Under-the-counter cash sales of gold are growing in India, where bullion and jewellery change hands without invoices that tax authorities can trace. Bulk buyers paying cash can get as much as 6% off prevailing prices. At the retail counter, discounts can reach Rs 10,000 per 10 grams, depending on bargaining and the buyer's ties with the jeweller.
Anuradha, a 55-year-old homemaker, bought wedding jewellery at Rs 5,000 per 10 grams below the market price and took no receipt. "It was an offer I couldn't refuse. Gold prices are way too high and we trust the jeweler," she said.
Why buyers are going off the books
The trend picked up after the government raised the import duty on gold and silver to 15% from 6% on May 13. Add 3% GST, and a legal purchase carries a large tax load. Gold is also still about 28% dearer than a year ago, even after easing from its record highs.
"Higher import duty creates a significantly greater incentive for gold to enter outside the official duty-paid channel," said Hiren Chandaria, managing director for the Middle East and Asia at Monetary Metals. Traders in the informal market are offering discounts of up to $200 an ounce below domestic prices. Officially imported gold sold at a discount of only about $50 an ounce in September.
What it means
The official market is losing new buyers. New gold ETF accounts, known as folios, fell from 12 lakh in January to about 4,000 in August, even though inflows from existing investors rose 67% that month to Rs 2,597 crore.
For the government, cash sales mean lost tax revenue and less visibility over how gold enters the country. For buyers, a missing invoice also means no written proof of what they paid or the purity they were promised.
Our read
Outlook: neutral. Cash deals shift where Indian gold is bought, not how much the world pays for it. Wider domestic discounts do signal soft demand at today's rupee prices.
What to watch
- Any change to the 15% import duty in response to weaker official imports.
- Wedding and festival season demand, and how much of it moves through cash deals.
- AMFI data on new gold ETF folios for September.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-05-13: India raises the import duty on gold and silver to 15% from 6%.
- 2026-09-29: Reports show under-the-counter cash gold sales growing, with discounts of up to 6%.
Demand Drivers
Prices about 28% above a year ago are pushing buyers to hunt for discounts, including off-the-books deals.
Government Policies
The rise in import duty to 15% from 6% has widened the gap between taxed and untaxed gold.
What could lift prices
- Cash sales are holding up with the wedding and festival season approaching, so demand has not vanished.
- Existing gold ETF investors raised inflows 67% in August.
What could weigh on prices
- Deep discounts in both official and informal channels point to soft demand at current rupee prices.
- New investors are staying away from gold ETFs, with new folios down to about 4,000 in August.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | High | Cash gold sales cut tax revenue and hide part of the country's gold demand from official data. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Jewellery | Negative | Jewellers who bill every sale lose customers to rivals offering cash discounts. |
| Bullion Trading | Negative | Officially imported gold must be discounted to compete with untaxed metal. |
Who gains, who loses
- Cash buyers: They save up to 6% on the market price by skipping the invoice.
- The government: Unrecorded sales escape import duty and GST.
- Jewellers that invoice every sale: They cannot match the cash discounts offered by rivals.
Other ways this could play out
- If the government cuts the import duty, the pull towards cash deals would weaken.
- If duty stays at 15% through the wedding season, the informal market's share could keep growing.
Price risks
- A sharp rise in global gold prices would push more buyers towards discounted cash deals.
- A crackdown on cash sales could shift demand back to official channels.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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