Gold Silver Reports — High Import Duty on Bullion Leads to Malpractices — The high import duty on bullion has opened the door to malpractices by a few unscrupulous jewellers who get a complete waiver of duty against exporting the entire content of gold. Top trade associations of the country have now brought this to the finance ministry’s notice while calling for a rationalization of the 10% duty.
These jewellers import bullion bars at zero duty subject to equivalent export of gold jewellery.
Here lies the catch. They claim the exported quantity as 22 carat purity, which is in fact of 18 carat.The export invoice shows that they have shipped 22 carat, for which they receive payment from the overseas buyer.
The 4 carat equivalent gold held back is converted into jewellery and sold in the local grey market.The cash received against this sale is transferred to the overseas buyer through the unofficial, hawala channel.
Since there’s no duty paid on this gold, the jeweller, after deducting the 2.5-3% cost of hawala and other necessary expenses, makes a clean 7% gain, sources from the bullion industry said.— Neal Bhai Reports