GST impact: Gold import surge from South Korea alarms govt 

Gold

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

Indians are stocking up on gold, jewellery demand soars 41% in Q2CY17: WGC 

Gold, Jewelry, Shop, Sales

India’s insatiable appetite for gold jewellery was evident once again in the second quarter of calendar year 2017 (Q2CY17). The total demand for gold jewellery surged to 126.7 tonnes, rising 41% as compared to the previous corresponding period, suggests the latest report by the World Gold Council titled ‘Gold Demand Trends Q2 2017’.

At a global level, the overall demand for gold jewellery in Q2’17 surged 8% year-on-year (y-o-y) to 480.8 tonnes, the report says. The strong recovery, WGC believes, had been widely expected after exceptional import figures were reported, hitting an all-time high of 104.6 tonnes in May as the market stockpiled gold ahead of the goods and services tax (GST) rate announcement.

“Expecting a punitive GST rate, jewellers and consumers alike crammed their purchases into the first two months of the quarter, slowing down once the government confirmed that a 3% rate would be applied,” WGC says.

That apart, WGC also attributes the rise in gold jewellery demand to the festival of Akshaya Tritiya – a key gold-buying festival in the Hindu calendar. The timing of the festival this year, it says, falling over a weekend and coinciding with a dip in the gold prices saw sales rise nearly 30% y-o-y .Read More