On Friday a gold sovereign (about 8.1 grams) the most popular benchmark price was quoted around 47,500 rupees for 22 carats up about a 1,000 rupees from a day earlier.
In March gold sovereigns were around 54,000 rupees when international gold prices started to slide in the wake of a strengthening dollar.
The price of a sovereign could reach up to 51,700 to 52,000 rupees as the tax takes effect, unless gold prices fall further, industry players said.
Gold prices to 1,269.45 US dollar s a troy ounce, the lowest since September 2010, against from highs of 1800 to 1700 US dollars an ounce over 2011 and 2012, as the US Federal Reserve printed money for 'stimulus'.
Following the collapse of the global commodity bubble in 2008, gold prices which peaked around 1,300 US dollars an ounce, fell to 800 - 900 dollars an ounce.
It again started to edge up as the Federal Reserve started to print money.
The Fed has indicated that it will end its dangerous 'quantity easing' money printing exerci