Gold smuggling: Volume up by 37% in Ahmedabad

AHMEDABAD: A rising number of gold smuggling cases have been detected at the Ahmedabad airport, and at airports across the country, ever since the basic customs duty on gold went up. At the Ahmedabad airport alone, seizures of smuggled gold have spiked by 37.5% merely eight months into FY 2023 as compared to FY 2022, suggests the data released by the Ahmedabad customs commissionerate.
From March to November 2022, 30 persons have been arrested at the Ahmedabad airport in connection with gold smuggling. About 40kg of gold was seized in FY 2022 and the figure shot up to 55kg in the current fiscal.

Effective July 1 this year, gold started attracting a basic customs duty of 12.5% in addition to the 2.5% agriculture cess.
Over and above this, 3% GST is also applicable on gold purchases, taking the effective duties and taxes on gold to 18%.
On Wednesday, the gold price stood at Rs 54,400 per 10 gram in the Ahmedabad market. Therefore, for every kilogram of gold smuggled, the smuggler makes a profit of Rs 9.7 lakh, excluding costs paid to couriers.
“Due to the geopolitical uncertainty and economic instability, yellow metal prices are already high. With the Indian currency depreciating past the 81-mark, the effective price of gold in the Indian market is even higher after adding duties,” said Haresh Acharya, director, India Bullion and Jewellers’ Association. Acharya added: “Therefore, the procurement of gold through unofficial channels is increasingly taking place here to save duties.”
In fact, IBJA has already sent a representation to the Union finance ministry, seeking to abolish the basic customs duty on gold and instead hiking the GST to 15%.
“In that situation, smugglers will not get any incentive to procure gold from other countries. A level-playing field will be created for gold industry players, as unofficial procurements will stop,” said a senior IBJA official. “At the same time, the exchequer will not lose revenue. It will also make the gold market more organized.”