Coinciding with the biggest drop in global gold prices since 1983, the Finance Ministry has slashed the tariff value on the yellow metal to $499 per 10 gram, from a level of $521 per 10 gram earlier.
Tariff value is the base price on which customs duty is determined.
International prices of the yellow metal have dropped 14 per cent in the last two days. It has lost 28 per cent since climbing to a record $1,921.15 an ounce in September 2011.
The Finance Ministry has also lowered the tariff value on silver to Rs 890 per kg from a level of $920 per kg.
High gold imports were considered one of the main factors for the current account deficit to shoot up in the recent quarters.
To curb gold imports, the Government had, in January hiked the import duty on gold from four to six per cent.
The jury is still out on whether this move had curbed gold imports.
The slump in gold prices in the last two days is good news for both the Finance Ministry and the Reserve Bank of India.
Both of them face a Herculean task of managing the current account deficit which has touched five per cent of gross domestic product.