Amid GST transition, gold smuggling in India seen rising: WGC

Hike in sales tax effectively lifted margins for "grey market" operators, says WGC India MD

World Gold Council on Thursday said that unofficial import or smuggling of gold in India is expected to continue with 13 per cent of tax incentives (10 per cent as customs duty and 3 per cent of GST) with an estimate of 100-120 tonnes of illicit gold expected to be coming into the market in 2017 compared to 119 tonnes reported in the previous year.

"With GST levy organized sector will witness a sharp increase in its market share from the existing around 25 per cent to 45 per cent in near future with increase in transparency at existing players and the entry of new players getting organised with tax compliance," said Somasundaram P R, Managing Director of WGC's India operations.

Despite that, the worry is that 13 per cent is huge enough at one shot for smugglers to make money and hence there will be a separate market for jewellery, coins and bars made from unofficially imported gold. Generation of black money has not stopped yet and GST and other measures may not be foolproof enough to stop smuggling.