⚡ Silver Regulation At a Glance
(+ AIDC + IGST)
(bullion, coins, jewellery)
(after 24 months, no indexation)
in India (SEBI regulated)
for cash silver purchase
on SEBI-regulated exchange
🏛️ Overview
Silver occupies a unique position in India — valued both as a precious metal (jewellery, religious use, gifting) and as a critical industrial commodity (electronics, solar panels, medical devices). Unlike gold, silver has no equivalent of the Gold Control Act history and was never government-controlled. However, it is subject to the same multi-agency regulatory framework: customs rules, GST, income tax, PMLA, FEMA and SEBI regulations.
India is the world's largest silver consumer, importing over 4,000–6,000 tonnes annually. The multi-commodity exchange (MCX) is the primary platform for silver price discovery in India, with silver futures among its most actively traded contracts.
🏭 Silver Use Cases in India
✈️ Silver Import Duty & Customs
| Silver Category | Basic Customs Duty (BCD) | AIDC (Cess) | IGST | Effective Total |
|---|---|---|---|---|
| Silver bullion (bars / granules) | 15% | 6% | 3% | ~25.9% |
| Silver coins ≤ 10g | 15% | 6% | 3% | ~25.9% |
| Silver jewellery | 25% | — | 3% | ~28%+ |
| Industrial silver (electronic grade) | 15% | 6% | 3% | ~25.9% |
| Silver compounds (for industrial use) | 7.5% | — | 18% | ~26.5% |
| NRI bringing silver — duty-free limit | ₹50,000 (male) / ₹1,00,000 (female) — same as gold; combined with gold | 36% on excess | ||
📌 Note: India raised silver import duty in the 2023 budget from 10% to 15% BCD (plus AIDC) to protect domestic recyclers and reduce import dependence. The AIDC on silver (6%) is higher than on gold (5%) to reflect the greater industrial import demand.
🧾 GST on Silver
💿 GST Rates
- Silver bullion / bars / coins 3%
- Silver jewellery (supply value) 3%
- Making charges (job work) 5%
- Silver compounds (industrial) 18% (varies)
- Silver ETF units Exempt
📋 Key GST Rules
- ✅ HSN Code for silver: 7106 (unwrought/semi-manufactured); 7113 (silver jewellery)
- ✅ ITC on silver purchases — blocked (Section 17(5) — same as gold)
- ✅ Reverse charge: Applies when buying from unregistered supplier
- ✅ Industrial buyers (electronics, solar): ITC available on silver used as raw material (not blocked for manufacturers)
- ✅ GST registration: mandatory for silver traders with turnover >₹40 lakh
- ✅ E-invoicing mandatory for silver traders with turnover >₹5 crore
📊 Silver Capital Gains Tax — 2026 Rules
| Silver Investment | Holding Period | Tax Type | Tax Rate | Indexation |
|---|---|---|---|---|
| Physical Silver (bars / coins / jewellery) | < 24 months | STCG | Slab rate | No |
| Physical Silver | ≥ 24 months | LTCG | 12.5% | No (post Budget 2024) |
| Silver ETF | < 24 months | STCG | Slab rate | No |
| Silver ETF | ≥ 24 months | LTCG | 12.5% | No |
| MCX Silver Futures | N/A (trading) | Business Income / Speculative | Slab rate | No |
| MCX Silver Options | N/A (trading) | Business Income | Slab rate | No |
💡 Silver Tax Planning
- ✅ Hold physical silver or Silver ETF for 24+ months to get LTCG benefit
- ✅ Silver ETF losses can be set off against gold ETF / physical gold gains
- ✅ MCX traders: Declare as business income — can claim deductions on brokerage, platform fees
- ✅ Silver as part of SIP (via ETF route) is most cost-effective and transparent
- ✅ Inherited silver: cost carryover from donor — same rule as physical gold
⚠️ Common Mistakes
- ❌ Treating MCX silver futures P&L as capital gains — it's business income
- ❌ Not reporting silver sales in ITR — Silver transactions >₹50K are tracked via Form 61A
- ❌ Forgetting that pre-2001 silver uses FMV as of 1 April 2001 as cost
- ❌ Confusing industrial silver (ITC available) with investment silver (ITC blocked)
📈 Silver ETF — SEBI Regulations
SEBI introduced the Silver ETF framework in 2021, enabling mutual funds to launch exchange-traded funds backed by physical 99.9% pure silver stored in LBMA-approved vaults in India. The first Silver ETF in India was launched by Nippon India in January 2022.
✅ Silver ETF Rules (SEBI Circular Oct 2021)
- • Minimum 95% of assets in physical silver or silver-related instruments
- • Silver purity: minimum 99.9% fine (LBMA standard)
- • Vault must be LBMA-approved, domiciled in India
- • Third-party custodian and independent auditor mandatory
- • Expense ratio cap: 1% p.a. for silver ETF
- • 1 unit ≈ 1 gram of silver (approx; varies by AMC)
📊 Silver ETFs Available in India (2026)
- • Nippon India Silver ETF (NSE: SILVERBEES)
- • ICICI Prudential Silver ETF
- • Aditya Birla Sun Life Silver ETF
- • Axis Silver ETF
- • Mirae Asset Silver ETF
- • Silver FoFs available from multiple AMCs (no Demat needed)
💡 Advantage over physical silver: Silver ETFs eliminate storage cost, theft risk, purity concerns and making charges. They are fully liquid (traded on NSE/BSE), have transparent daily NAV, and the same LTCG tax treatment as physical silver at 12.5% after 24 months.
📉 MCX Silver Futures & Options
🏛️ Regulatory Framework
- 📌 MCX (Multi Commodity Exchange) is regulated by SEBI under the SC(R) Act
- 📌 Silver futures: 1 kg lot size (Silver Micro: 1 kg, Silver Mini: 5 kg, Silver: 30 kg)
- 📌 Underlying: 99.9% pure silver (LBMA good delivery quality)
- 📌 Settlement: Physical delivery at exchange-approved warehouses OR cash settlement
- 📌 STT (Securities Transaction Tax): Not applicable on commodity derivatives
- 📌 CTT (Commodity Transaction Tax): 0.01% on sell side of non-agricultural futures
💰 P&L Taxation for Futures Traders
- 📌 All MCX commodity F&O profits/losses: Business Income (not capital gains)
- 📌 Must file ITR-3 (or ITR-4 for presumptive); audit mandatory if turnover >₹10 Cr
- 📌 Turnover calculation: Absolute value of profit + loss (not the contract value)
- 📌 Deductible expenses: Brokerage, CTT, platform charges, internet bills, proportion of trading costs
- 📌 Losses: Set off against any business income; carried forward 8 years (ITR filing mandatory)
- 📌 No TDS on futures P&L — self-assessment and advance tax responsibility of trader
🏅 BIS Hallmarking for Silver
Unlike gold (mandatory since June 2021), BIS hallmarking for silver is currently voluntary. BIS has implemented a voluntary hallmarking scheme under the BIS Act 2016, and many reputable jewellers opt for it to differentiate their products.
📋 Permitted Silver Fineness (Voluntary BIS)
- • 999 — 99.9% pure silver (Fine silver)
- • 970 — Britannia silver
- • 925 — Sterling silver (most common for jewellery)
- • 900 — Coin silver (historical)
- • 835 — European silver
- • 800 — Continental silver
🔍 How to Identify Good Silver Jewellery
- • Look for 925 stamp (sterling) or 999 stamp (fine silver)
- • BIS hallmark (triangle logo) if voluntarily hallmarked
- • Ask for a karat/purity certificate from the jeweller
- • Acid test or XRF tester can verify purity
- • Buy from BIS-licensed or reputable jewellers
📢 Expected: The Ministry of Consumer Affairs has proposed making BIS hallmarking mandatory for silver jewellery as well — similar to the gold rollout. Watch for official gazette notifications from 2025-2026.
🔍 PMLA Compliance — Silver Transactions
| Transaction Amount | Requirement | Applicable Rule |
|---|---|---|
| Up to ₹50,000 | No mandatory PAN (but seller may request) | Income Tax Act |
| ₹50,001 – ₹2,00,000 | PAN or Form 60 mandatory | Income Tax Rule 114B |
| Above ₹2,00,000 (cash) | Prohibited — Section 269ST; 100% penalty on both parties | Income Tax Act, Sec 269ST |
| Any (suspicious patterns) | Jeweller / dealer must file STR with FIU-IND | PMLA 2002 |
📋 Silver Dealers as PMLA Reporting Entities
Silver dealers and jewellers are designated Reporting Entities under PMLA if they deal in precious metals with cash transactions above prescribed thresholds. They must:
- • Maintain KYC records for 5 years
- • Register with FIU-IND and file Cash Transaction Reports (CTR) for cash >₹10 lakh/month
- • File Suspicious Transaction Reports (STR) — no threshold — anytime a suspicious pattern is noticed
- • Appoint a Principal Officer for compliance
⚖️ Silver vs Gold — Regulatory Comparison
| Aspect | 🥇 Gold | 🥈 Silver |
|---|---|---|
| Import duty (effective) | ~24.75% | ~25.9% |
| GST rate | 3% (making: 5%) | 3% (making: 5%) |
| LTCG tax rate | 12.5% (after 24 months) | 12.5% (after 24 months) |
| BIS Hallmarking | Mandatory (since June 2021) | Voluntary |
| ETF / Market instrument | Gold ETF (since 2007) | Silver ETF (since 2022) |
| Government bond scheme | Sovereign Gold Bond (SGB) — LTCG exempt at maturity | No equivalent sovereign scheme |
| Monetization scheme | Gold Monetization Scheme (GMS) | No equivalent scheme |
| Futures exchange | MCX Gold Mini, Gold Petal | MCX Silver, Silver Mini, Silver Micro |
| Cash purchase limit | ₹2 lakh (Sec 269ST) | ₹2 lakh (Sec 269ST) |
| Industrial demand | Low (~10% industrial) | High (~50% industrial / solar) |
🧮 Related Calculators on Tenhash
⚠️ Disclaimer
This page is for educational and informational purposes only and does not constitute legal, tax, or financial advice. Silver regulations, import duties, GST rates and tax rules change frequently. Always refer to official CBIC, BIS, RBI, SEBI and Income Tax Department notifications and consult a qualified CA or legal professional before making decisions. Last reviewed: March 2026.