A key Goods and Services Tax (GST) panel in India, the Fitment Committee, has put forward a recommendation to discontinue the current IGST exemption for banks importing gold, silver, and platinum. If approved, this move would subject such precious metal imports by banks to a 3% IGST levy.
New Tax Levy Proposed for Banks
The exemption, initially introduced for gold in 2017 following a GST Council recommendation, was intended to facilitate trade for banks and nominated agencies. It was later extended to include silver and platinum imports. However, the Fitment Committee now advises withdrawing this exemption for banks and certain nominated agencies.
Why the Change? Addressing Discrepancies
The core reason for this proposed change stems from a mismatch between the GST exemption notification and the Directorate General of Foreign Trade (DGFT)'s updated list of eligible banks. While the previous lists of banks authorized to import gold and silver were valid until March 31, 2026, the DGFT issued a new public notice on April 17, 2026, with an updated list for the period of April 1, 2026, to March 31, 2029. Crucially, the relevant GST exemption notification was not updated to align with this new DGFT list.
Consequently, according to the Fitment Committee's documentation, the IGST exemption has not been available to banks since April 1, 2026. The exemption, however, continues for nominated agencies covered under List 15, as their list is not subject to periodic renewal by the DGFT.
Impact on Importers and Input Tax Credit
Should the exemption be withdrawn, imports of gold, silver, and platinum by banks and nominated agencies under Lists 13, 14, and 15 would attract a 3% IGST. However, this does not necessarily mean a direct 3% increase in the final tax cost for eligible importers. The Fitment Committee has clarified that banks and nominated agencies would be eligible to claim input tax credit on the IGST paid, allowing them to utilize this credit against their output liabilities.
Broader Amendments Proposed
In addition to the direct levy, the committee has also suggested consequential amendments to existing GST notifications governing the supply of gold, silver, and platinum by nominated agencies under the export-linked supply scheme. These amendments include recommending a revised definition for nominated agencies, referencing Appendix 4B of the DGFT's Handbook of Procedures, as periodically updated.