New Delhi, Sept. 29 -- Exorbitantly high gold prices and steep taxes are driving more Indian buyers into under-the-counter cash sales, where bullion and jewellery change hands without invoices that can be traced by authorities.

Buying off the books with cash can shave as much as 6% from prevailing market prices for bulk buyers, according to five people familiar with the trade, asking not to be named discussing a sensitive matter. Dealers accepting cash can sidestep taxes and pass part of the savings on to customers.

One shopper, who gave her name only as Anuradha, said she bought ornaments for her daughter's wedding at a discount of Rs.5,000 for every 10 grams-but took no receipt. The savings were hard to ignore for the 55-year-old home...