The 63-year-old businessman swallowed the 33-gram bars, known as gold biscuits, in Singapore and brought them to India on March 28, the Times of India newspaper reported.
But he was unable to recover them after they lodged in his small intestine despite drinking lots of water and taking laxatives.
On April 7 the man requested surgery saying he had swallowed a water bottle cap and it was hurting.
He went into surgery on April 9 after X-rays confirmed the presence of foreign metal. When doctors unexpectedly struck gold they informed the police and customs department.
Customs officials impounded the bullion, worth an estimated 1.2 million rupees (640,000 baht), and the businessman was taken from hospital into to police custody on Tuesday.
"He is a wealthy man with a good business in Chandni Chowk," said CS Ramachandran, the doctor who treated him. "It is both surprising and shocking to know that he could do something like this," he was quoted as saying by the Time of India report.
There has been a spike in gold smuggling since the government imposed a 10% duty on gold bullion imports in April, up from 8%.