The Central Board of Indirect Taxes and Customs (CBIC) has stepped up its watch on the import of unbranded gold jewellery amid a spurt in seizures on international borders and from importers.
During FY24, the CBIC and Directorate of Revenue Intelligence (DRI) jointly seized about 5 tonnes of gold, 30 per cent more than what they did in FY23.
In FY23, 3.5 tonnes of gold was confiscated.
The official data suggests that most of the seized gold was from Myanmar and smuggled into India through Mizoram and Manipur, though difficult terrain, which goes unchecked.
Customs is taking help from local authorities and the Border Security Force to locate them.
“There is a significant increase in gold jewellery seizure in the past one year, contributing a major chunk in overall seized gold.
"We are monitoring inbound shipments of gold on all potential routes,” said a senior official.
Official sources said shipments from Southeast Asian countries had been vigorously scanned.
They are coming through legitimate routes under free-trade agreements (FTAs).
Besides, the authorities are keeping a close watch on India’s land borders with Myanmar, Bangladesh, and Nepal.
“We are scanning the data from partner law-enforcement agencies, tracking each gold shipment to check whether it has connections with those coming through illegitimate routes,” the official cited above said.
An email to the CBIC seeking response remained unanswered till the time of going to press.
Seizures would be 5-10 per cent of the smuggled gold.
The government had last year brought import curbs on certain kinds of gold jewellery and articles.
Under this, a licence is required to import these goods. However, the rule did not apply to the India-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) tariff rate quota.
Under the free-trade pact, India has set a lower tariff rate quota of 2 per cent for up to 200 tonnes of gold imported from the United Arab Emirates.
Those curbs were to address a rise in import from Indonesia under the India-Asean FTA (Asean is the Association of Southeast Nations) wherein some articles of gold were coming duty-free and were melted in India to make jewellery. However, despite curbs, such pacts continue to be violated by people running syndicates, another officer indicated.
He said data analytics would help in nabbing them.
Abhishek Jain, indirect tax head and partner, KPMG, said: “It will be interesting to see the findings of these investigations and, specifically, the government’s approach to unearthing evasion in this area.”
There remains a significant difference in gold prices between major holiday destinations for India, including Dubai and certain Southeast Asian countries.
We need to see monitoring of imports by these tourists, who would generally consider clearing them as those for personal use, Jain added.
Gold import attracts 15 per cent import duty, including 5 per cent of agriculture cess.
In January the Centre raised import duty on gold and silver findings (pins, hoops, beads, etc) and coins of precious metals to 15 per cent from 11 per cent, in order to end tax advantage in importing gold and silver in the form of findings rather than bars.
“High customs duty on products such as gold jewellery makes it more attractive for tax evaders, more so because of the differentiation between the rates on gold bars and gold jewellery,” said M S Mani, partner, Deloitte.
Gold import surged in April to $3.11 billion, more than doubling from the $1.53 billion in March. The yellow metal accounts for over 5 per cent of the country’s imports.
