ALSO READNow, gold importers misusing FTA route for money laundering GST impact: Experts caution against zero-duty gold imports from South Korea GST impact: Gold import surge from South Korea alarms govt 3% GST opens room for cheap import of gold jewellery from FTA countries India gold imports to plunge during Diwali, Dussehra after pre-GST buys
Worried over multi-fold jump in gold imports from South Korea, the government is contemplating steps to check the surge in inbound shipments from the country, an official said today.
Gold imports from South Korea, with which India has a free trade agreement since January 2010, has jumped to $338.6 million during July 1 and August 3 this year. The import in 2016-17 was 470.46 million.
"We have lots of mechanisms in place to control this surge like we can stipulate that the gold which is imported should be used for designated purpose like for export only.
"Safeguard duty can also be imposed but we have to plug the loophole before the onset of the festive season," the finance ministry official said.
Under the free trade pact between India and South Korea, basic customs duty on gold was eliminated.
Further, the 12.5 per cent countervailing duty on gold imports has been subsumed in the Goods and Services Tax (GST). Accordingly, the imports now attract only 3 per cent integrated GST.
The official added that similar surge in gold imports could be witnessed from other countries with which India has free trade pacts.
Currently, gold imports attract 10 per cent customs duty. India is the world's second biggest gold consumer after China. The imports mainly take care of demand by the jewellery industry.
India has implemented free trade agreements with countries including Japan, Asean and Singapore.
The collections from customs duty and IGST from imports post implementation of GST has almost doubled to Rs 30,000 crore in July.
Gold imports contributed significantly to this increased collection.
The revenue collected include those on account of customs duty, Integrated-GST (IGST) from imports, Countervailing Duty (CVD), special addition duty (SAD) and cess collection on imported items.