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India, the world's biggest gold consumer after China, imposes a 10 per cent import duty on gold and silver, but this does not apply to countries with which it has Free Trade Agreements (FTAs), like South Korea.
To avoid duty-free imports from those countries, the government previously imposed a 12.5 per cent excise duty. However, this was scrapped along with other local taxes when a goods and services tax (GST) was introduced on July 1.
After implementation of the GST, some trading houses started importing gold from South Korea without paying import tax, industry officials said.