Import duty hike to up gold smuggling

January 22, 2013 by adminficci News 0 comments

CHENNAI: An increase in the import duty on gold, the third in less than a year, is expected to lead to a rise in smuggling of the precious metal into the country. On Monday, the government hiked the import duty on gold from 4% to 6%.Air customs officials speculate that more gold will be smuggled from abroad through airports as import duty is now at its steepest. There has been an increase in smuggling of gold through Chennai from Sri Lanka, Singapore,Malaysia and other Southeast Asian countries over the past three years.This is the third time the government has raised import duty on gold. In March 2012, the government doubled import duty on standard gold from 2% to 4%. In January 2012, it increased duty from 1% to 2%. Of the 800 tonnes of gold that India imports every year, one-fourth is accounted for by Tamil Nadu.

While customs officials are apprehensive that they will have to be on their toes, bullion traders are unhappy that high duty will push up attempts to smuggle in gold by evading taxes and will lead to loss of jobs for local goldsmiths.Jewellers say smugglers, couriers and middleman can make as much as Rs 1,800 for every 10g of gold imported (6% of Rs 30,000).“With imports of 50kg, the margins can be as high as Rs 1 crore,” said a jeweller who did not want to be named. Jewellers say the government has seized close to 900kg of unaccounted gold in the last year.Prithviraj Kothari, managing director, RiddiSiddhi Bullions, said, “It will have a big impact on the bullion sector.The increase comes to approximately Rs 60,000 per kg of gold. There will be a difference of 7% between international and domestic prices of the yellow metal. This may lead to rise in malicious activities to import gold and jewellery. In turn, it will lead to an increase in unemployment among skilled artisans — around two million people depend on this sector for their livelihood.”Consumers will have to pay Rs 60 more per gram from Tuesday morning. “The wedding season has just begun and the hike will affect purchases,” said N Ananthapadmanabhan, regional chairman, All India Gems and Jewellery Trade Federation.Jewellers also anticipate under-reporting of business. “Many transactions will take place outside the books and such cash transactions without bills will not reflect in the overall turnover of the retailer,” he said. Gold prices in Chennai closed at Rs 30,715 (10g, 24 carat) on Monday.

http://articles.timesofindia.indiatimes.com/2013-01-22/chennai/36483298_1_import-duty-duty-on-standard-gold-prithviraj-kothari