Gold Import: Importers have found a new way to bring gold into India without paying any tax. These importers are bringing gold to India in the form of ‘platinum alloy’ from countries like Thailand, Indonesia and Tanzania. They show it to the customs officials as ‘platinum alloy’, due to which they do not have to pay any import duty or tax on gold.
Many sources familiar with this matter said that this is a case of a legal loophole. Importers are using the completely legally available route to import alloys in which the platinum content is more than two per cent and the rest of the alloy is predominantly gold. This is completely as per the custom tariff rules.
As per rules, platinum alloy generally attracts a tax of 5 per cent (0.5 per cent custom duty and 4.5 per cent Agricultural Infrastructure and Development Cess) when imported from the UAE. But there is no tax on platinum alloy coming from countries like Thailand, Indonesia and Tanzania. This is because India has a free trade agreement with ASEAN countries. Besides, it has kept import duty at zero to promote trade from many underdeveloped countries. Due to this, no tax has to be paid on import of platinum alloy from these countries.
On the other hand, 6 percent duty is imposed on the import of gold.
How does this new approach work?
Sources say that the whole secret of this issue is hidden in the definition of alloy. According to the Customs Tariff Act, if the platinum content in an alloy is more than 2 percent then it can be considered as platinum alloy. This means that if an importer puts only 2 percent platinum in the alloy and the remaining 98 percent gold, he can show it as ‘platinum alloy’.
Sources said that some importers from Delhi and Gurgaon areas have become masters of this new route. They are importing gold in the form of platinum alloy through countries like Thailand, Indonesia or Tanzania and taking advantage of zero custom duty agreements with these countries.
This is also confirmed by the data of Directorate General of Intelligence and Statistics (DGCIS). Till July this year, the import of platinum alloy from Tanzania in raw and semi-finished form was almost zero. But after this it increased to 267 kg in August. At the same time, Indian importers have started using the route of Thailand and Indonesia since last November, for which it will take some time to get the exact figures.
People familiar with the matter said that after bringing gold to India in the form of platinum alloy, they again refine this metal, extract gold from it and sell it in the market.
Moneycontrol has seen a copy of an importer’s bill. The bill stated that the seller was from Thailand and the importer had purchased about 80 kg of platinum alloy in semi-finished form from him. More importantly, the platinum alloy it imported contained 89 percent gold, 4 percent platinum and the rest other materials used to prepare the alloy.
Platinum alloy stopped coming from UAE after the budget
Indian importers had earlier used similar tricks to bring gold in the form of platinum alloy. But then he used to use the UAE route. However, in the import budget presented in July, the government reduced the import duty on gold from 15 percent to 6 percent, which reduced the profits of those importers through this route. There is a 5 percent tax on platinum alloy coming from UAE.
In such a situation, importers have started looking for other routes instead of UAE and now countries like Thailand, Indonesia and Tanzania are emerging as big hubs for such imports.
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