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Gold, the precious yellow metal, is always termed as a safe asset among conventional investors. Among Indians, gold has been long valued as a means for financial security. According to the World Gold Council, the demand for gold in India's jewellery market pushed the global gold demand by 12% in the second quarter of this year. India is among one of the largest gold importers across the globe and the imports mainly focus on the demand from the jewellery sector. In the financial year 2018-19, India imported 982 tons of gold compared to 955 tons in the previous year.
For buying gold, Dubai, the city of gold, has been one of the preferred choices as buyers can save on taxes while enjoy buying gold jewellery carrying gold purity hallmark. Indians are among the top ten nationalities investing in the gold sector in Dubai. Though the international standard rate of gold per gram is same everywhere, it is the relatively cheaper cost of labour and the exemption of value-added taxes on gold in Dubai that make it a favourite destination among gold buyers.
The UAE government had briefly introduced a 5 per cent value-added tax on gold, diamonds, and precious metals at the beginning of this year. However, the tax implementation was rolled back due to low demand and a 30-40% slump in the sale of gold, silver, and platinum.
Before bringing gold from Dubai to India, it is important to understand the import rules as set by the Government of India. Flouting those rules or trying to evade paying customs duty on gold import can have serious implications. The Central Board of Excise & Customs allows passengers of Indian origin or Indian passport holders staying abroad for at least six months, to import gold as baggage while flying from Dubai to India. Passengers can carry gold as baggage along with them during their arrival in India or import the same as unaccompanied baggage within 15 days of their arrival. They can also obtain the permissible amount of gold from the Customs bonded warehouses of State Bank of India. Under such circumstances, passengers need to file a declaration during their arrival in India regarding obtaining gold from the Customs bonded warehouse and pay import duty before the clearance.
Indian male passengers residing outside India for more than a year can carry up to 20 grams of duty-free gold jewellery worth Rs 50,000 or less while travelling to India via Dubai. Female Indian passport holders living abroad for more than a year can bring along duty-free 40 grams of gold jewellery worth Rs 100,000 or less. Bringing gold jewellery over this limit is subjected to import duty.
Children over two years of age, who have stayed abroad for a year or more, can also carry along duty-free gold jewellery during their travel from Dubai to India. Import of duty-free gold is applicable only for gold jewellery and does not include gold coins, gold bars, or gold biscuits. Also, gold jewellery studded with stones or pearls does not qualify for the duty-free allowance.
According to the 2019 budget report, the customs duty on gold import to India has been proposed to be increased from 10% to 12.5%. Non-resident Indians visiting India after a minimum stay of six months abroad and carrying gold above duty-free limit need to pay customs duty on gold import in convertible foreign currency. In case, a passenger-carrying gold has stayed abroad for less than six months, he or she needs to pay 36.05% as import duty.
Further, there is a weight limit on gold import even after paying import duty. A passenger can only bring along gold coins and bars weighing up to 1 kilogram while travelling from Dubai to India. Earlier, this limit was 10 kilograms of gold per passenger. But now carrying gold over 1 kilogram while travelling to India is strictly prohibited and offenders might be prosecuted with the additional gold beyond the stipulated limit being seized. The gold bars should have details such as weight, serial number, and the name of the manufacturer properly inscribed.
In India, the customs duty on gold is applied in two ways:
· Ad-Valorem rate of duty: The rate of duty is based not on the weight of gold, rather on its value.
· Specific rate of duty: This is based on the quantity or weight of gold.
In addition to this, 3% education cess is levied upon the applicable duty value. As a responsible traveller bringing in gold to India, one should be aware of the latest rate of customs duty to avoid unnecessary hassles.
It is necessary to declare gold while arriving in India and pay customs duty if the amount is beyond the duty-free limit. Passengers carrying gold jewellery above the permissible limit should not walk through the green channel that is meant only for travellers without any dutiable goods. The red channel is designated for passengers carrying dutiable goods. Import of gold without declaration or by concealment in baggage can lead to confiscation as well as penalty and fine. The offender might be at risk of getting prosecuted under the Customs Act 1962.