July 26, 2017
If industry experts are to be believed, the recently implemented goods and services tax (GST) regime might have inadvertently opened a channel for gold importers to launder money out of the country. Many bullion importers, it is learnt, have been exploiting the zero-duty facility under India’s free trade agreements (FTAs) with several countries for this purpose. According to an industry veteran who did not wish to be named, “under two treaties that India has signed with other countries – FTA and Comprehensive Economic Partnership (CEP) – gold can now be imported without paying the 10 per cent customs duty, as the 12.5 per cent countervailing duty has been subsumed in the goods and services tax (GST), which is 3 per cent for gold”. These importers prefer gold coins as they offer a greater scope for over-invoicing than gold bars. And, through over-invoicing, they are able to illegally send extra dollars out of the country.