Smuggling refers to the act of bringing goods through illicit channels into a nation. This is often done to either transport illegal goods or bring legal goods into the country without paying duties and taxes. Many items are smuggled so that the import and customs on such items will be avoided, keeping them cheaper for resale.
Gold is usually smuggled in from locations where gold is cheaper because of lower taxes to countries like India where there's high demand. Smuggling is prevalent in India since the country features a large demand for gold.
Most of the demand is met through imports, creating opportunities for smugglers to earn a fast buck by bringing in gold stocks through illicit channels.
Canada-based group IMPACT found in one among its reports that almost 25 percent of all gold coming into India does so through illegal channels. With a complete import volume of 800-900 tonnes, IMPACT estimates that around 200 to 225 tonnes of gold arrive in India through smuggling.
After the Gold Control Act was repealed within the 1990s, individuals were now absolve to import gold in forms aside from jewellery furthermore. The pent up demand ushered in a very boom for gold imports within the country. Initially, the move did put brakes on the gold smuggling network.
However, the imports attracted high fees and duties when entering India. As such, an illegal network for gold smuggling was quickly established and grew in popularity.
The government at the time brought in reforms that reduced the customs paid on gold imports. A cap of Rs 450 per 10 gram of gold was placed on duties levied on gold imports, and also the move quickly led to crashing the gold smuggling trade.
The seizure rate of just 2 percent for illicit gold does little to discourage smugglers moreover, who often use mules to try to do the work. Mules are often underprivileged or needy individuals that are coerced or forced into smuggling gold for petty change.
In 2013, the central government removed the cap on duties of gold imports and therefore the smuggling of gold was back with a bang. Today gold imports command additional fees of nearly 20 percent through taxes and duties. With the value of gold skyrocketing over the past number of years, the potential for straightforward and enormous profits for smugglers grew tremendously.
Most of the smuggled gold in India comes through the United Arab Emirates, which accounts for 75 percent of the gold coming into the country. India’s large, and mostly unmanned borders, to the east also help smugglers arrive into the country by other routes.
The government and enforcement authorities are taking many measures to stem the matter. they're even trying to use the Unlawful Activities (Prevention) Act to prosecute those individuals who are caught trying to smuggle gold into the country.
Any legal passenger can bring a selected amount of commodities as prescribed under the Indian laws. The Indian citizens get a bonus over the others regarding the number of products which they will carry. An Indian citizen who is arriving from UAE can bring a selected amount of gold and silver with him except for that there are certain conditions which are to be fulfilled. but that, there are variety of restrictions which apply even to the Indian citizens.
An Indian passenger or any passenger holding a passport issued under the Passport Act, 1967, who has been abroad for a period not but 3 days can bring any commodity aside from those which are restricted, up to the worth of INR 45,000.
An Indian passenger or any passenger holding a passport issued under the Passport Act, 1967, can even bring a laptop with him without giving any duty for it except the products included within the 45,000 rule.
Before 26th of August, 2013 an Indian could also bring a television of any kind, be that Plasma or LCD or LED under the 45,000 duty free rule, but now a television can't be included in it in any case.
An Indian passenger or any passenger holding a passport issued under the Passport Act, 1967, who has been abroad for a period of not but one year can bring a selected amount of bijou with him or her, which shall be included in their baggage.
The amount is:
Jewellery up to INR 50,000 just in case of a male
Jewellery up to INR 1,00,000 just in case of a girl passenger.
Any passenger of Indian origin or any passenger holding a passport issued under the Passport Act, 1967 who has been abroad for a period of six months or more can point out to 1 kilograms of gold but a requirement is to purchased it. Earlier the limit was 10 kgs which has now been reduced to 1 kg.
If any passenger brings over the prescribed or allowed amount of gold then he will need to give extra custom duty for that which could be a quite high.
For example, if an Indian passenger brings quite 1 kilogram of gold then for the 1 kilogram he will should pay only 10% of the worth of gold in Indian market and for the number exceeding that, he will must pay a significant custom duty of 36.05% of the value of gold as per the Indian market.
Effect of the New Laws and Rules
There are new laws formulated both in India and also in UAE regarding the import and export of products or commodities from or to their country. Both the governments realized that there are a variety of loopholes within the trading rules between the 2 countries which is giving the smugglers a chance to cheat and make money by illegally trading goods between the 2 countries.
The Indian government has made a giant move to prevent the illegal trading of gold and electronics between India and UAE. The Indian government has changed its rules associated with the allowed limit essential and export of commodities.
Due to the very fact that both the governments have made certain changes associated with the import and export of gold and electronics from and to their countries, there has been a large deviation within the amount of trade between the 2 countries. The hiked custom duties have made sure that there now not remains a large difference between the costs of gold and electronics within the two countries. Now the limit of commodities which may be imported without paying any duty has been reduced and this decision will support the businessman of India.