A smart air passenger can gain more than a lakh of rupees if he or she can sneak in one kg of gold.
With import duty of gold increased from Rs30 per gram to Rs115 per gram in two months, the incentive to smuggle in gold has increased. “Even if a family brings in a quarter kilogram of gold in the form of basic jewellery, they will straightaway save `25,000, which in turn means a free air ticket,” said an industry expert.
“The rise in duty structure is actually a signal for smugglers to go ahead with illegal import of gold into the country,” said M. R. Sivaraman, IAS, former union revenue secretary. While importers had been paying only Rs30,000 per kg of customs duty on gold imports till Jan. 17, finance minister Pranab Mukherjee increased it to Rs58,000 per kg the next day.
In the 2012-13 budget he raised the customs duty from two per cent to four per cent, thereby increasing the duty amount to `1,15,000 per kg.
Federation of Indian Chambers of Commerce and Industry (FICCI) southern region chairman M. Rafeeque Ahmed said end users would also be burdened with the rise in gold import costs.
Following the budget announcement, the price of a gram of pure gold rose to Rs2,815 in Chennai compared to Rs2,700 on Friday morning. Mr Daman Prakash, a leading bullion trader in Chennai, said the requirement of a pan card to buy gold worth over Rs2 lakh would dissuade retailers from buying in bulk quantities.
However, the rise in import duty on gold would help contain the current account deficit, as the country cannot afford to reduce import of fuel while it can restrict gold imports, he pointed out.