A month after goods and services tax (GST) roll-out, a sudden deluge of gold imports from free trade partner South Korea has alarmed New Delhi. Swinging into action, the government is examining several options, including levy of safeguard duty on gold imports from South Korea to plug the route. Officials brainstormed on the matter through Tuesday, it is learnt. Among others, Revenue Secretary Hasmukh Adhia met Commerce Secretary Rita Teaotia to assess the situation.
In July itself, 8,400 kg of gold, essentially in coins, came to the country from South Korea, compared to almost nil last year in the same month. Sources said that traders may be exploiting the favourable reduction in tax incidence under GST by routing imports through Seoul, to take advantage of the India-Korea Comprehensive Economic Partnership Agreement (CEPA), the free trade pact.
”There is a sharp rise in gold imports after GST implementation, only from South Korea. We are looking at all options available to us as this is a big cause of concern. Before July, we were not getting gold coins or gold medallions, which we are getting now,” said a senior government official. He added that the FTA route should not be misused as it is going to impact the local domestic market. The ministry of finance recently notified rules under the India-Korea FTA, empowering the Director General of Safeguards to slap duty on such imports.
import from Korea is exempted from customs duty under the 2009 agreement, and the importer only has to pay 3 per cent IGST. Until June, the excise duty on gold and jewellery was 12.5 per cent