UPSC Prelims Practice Questions — Centre doubles the import duty on gold, silver; move is criticised as retrograde

Q1. In the May 2026 restructuring of the effective import duty on gold, which one of the following components registered the single largest increase in percentage-point terms?

  • A. Basic Customs Duty
  • B. Agriculture Infrastructure and Development Cess (AIDC)
  • C. Integrated GST
  • D. Social Welfare Surcharge

Q2. Which of the following are correctly identified as components of India's current account in the balance of payments?

  1. The merchandise (goods) trade balance
  2. Net receipts from services such as IT and tourism
  3. Remittances by Indians working abroad
  4. Net foreign direct and portfolio investment inflows
  • A. 1, 2 and 3
  • B. 1 and 4 only
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q3. The customs notifications that doubled the effective import duty on gold and silver in May 2026 were issued by which one of the following?

  • A. The Department of Revenue (Central Board of Indirect Taxes and Customs), Ministry of Finance
  • B. The Directorate General of Foreign Trade, Ministry of Commerce and Industry
  • C. The Reserve Bank of India
  • D. The Ministry of Mines

Q4. By how many percentage points did the effective import duty on gold and silver rise when the hike took effect on 13 May 2026?

  • A. 5 percentage points
  • B. 7 percentage points
  • C. 9 percentage points
  • D. 11 percentage points

Q5. During 2013, as India battled a record current account deficit, how many times did the government raise the import duty on gold in the course of the year?

  • A. Two times
  • B. Three times
  • C. Four times
  • D. Five times

Q6. The sharp cut in customs duty on gold and silver from 15% to 6% was announced through which one of the following?

  • A. The Union Budget 2024-25 by the Finance Minister
  • B. The Foreign Trade Policy by the Commerce and Industry Minister
  • C. A monetary policy statement by the RBI Governor
  • D. A notification by the Ministry of Mines

Q7. In the Union Budget 2024-25, the customs duty on gold and silver was cut from 15% to which of the following levels?

  • A. 4%
  • B. 6%
  • C. 9%
  • D. 11%

Q8. Which of the following are correctly identified with regard to the economics of India's gold trade and smuggling?

  1. A wider gap between domestic and international gold prices, driven by higher duty, increases the incentive to smuggle gold.
  2. Gold smuggling into India was estimated to rise from about 100 tonnes in 2022 to 155 tonnes in 2023.
  3. The UAE, a major source of India's gold-bar imports, is itself a large gold-mining nation.
  4. The 2024 duty cut was expected to reduce the profitability of gold smuggling.
  • A. 1, 2 and 4
  • B. 1, 3 and 4
  • C. 2 and 3 only
  • D. 1, 2, 3 and 4

Q9. Which of the following are correctly identified as measures India has historically used to protect its foreign exchange reserves or ease external-account pressure?

  1. Raising the customs/import duty on gold to compress imports
  2. Issuing bonds targeted at non-resident Indians, such as the Resurgent India Bonds
  3. Allowing the rupee to depreciate and cutting dollar outflows
  4. Cutting the policy repo rate to boost domestic consumption
  • A. 1, 2 and 3
  • B. 1 and 4 only
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4