In this blog post, Pravesh Naveriya from RDVV, Jabalpur, talks about the laws of importing gold and electronics from Dubai to India.
Indians are very fond of gold. As per a report, Indian women have around 11% of the world’s gold which is more gold than the reserves of USA, the IMF, Switzerland and Germany combined. And this is just the amount of gold which is as per the records. There is huge amount of gold which is not reported or billed. Adding that amount would very easily justify the reason that why after the Indian government had increased its import duties, the gold trade of the United Arab Emirates has gone down by 60%. Not only this, gold is the second largest traded commodity of India only after the mineral fuels which signifies that how important is gold for Indians.
The United Arab Emirates is the largest exporter of gold to India. Among the different reasons, the most prominent one is due to the fact that there is hardly any tax on the purchase or selling of any commodity. The gold market of UAE depends a lot on the customs and duties that the Government of India imposes upon the import of gold and other commodities.
Not only gold, but there are a number of commodities which are almost everyday imported to India from UAE that too in a huge amount. The commodities includes all the essential as well as non-essential commodities which includes televisions, mobile phones, and other electronics.
Why Import From Dubai
The UAE was a normal country just like any other country of the world before liquid petroleum and other mineral resources were not discovered in the country. After the discovery, the entire scenario just changed.
- The king or the Monarch of UAE decided to make the country a tax free country which opened the gates of opportunities for the entire world and the whole world was planning to settle to UAE or to do some business in UAE.
- There is one more reason why the UAE is considered to be among the best countries to import gold from, and that is the quality of gold that it possesses.
- The gold which the Indian market possesses is mostly 22 karat gold and there is huge possibility that, what you could be sold is even less than 22 karat whereas the gold that is imported from UAE is usually 24 karat gold which is more pure than a 22 karat gold available in India.
- Another reason why a large amount of gold is imported to India from UAE is the difference in the prices of gold in the two countries.
- The prices of gold are always less in UAE, due to the fact that taxes are not imposed on it, when compared with India and less taxes on the export makes the situation even better.
- The price of 10 grams gold of 24 karat in India today on the 10th of January 2017 is 28,075 INR whereas in UAE it is 26,490 INR.
- The business minds saw this opportunity to make lots and lots of money. They started to buy commodities from UAE and sell it in their countries in cheaper rates, so did the Indians.
- As per a report, 70 billion dollars worth of gold was traded through UAE in the year 2012 which is around 25% of the world’s total physical gold.
How to Import Gold and Electronics From Dubai
There is a prescribed procedure to bring any commodity into the territory of India.
- The laws which govern the import of commodities are the Customs Act, 1962, Foreign Trade(Development and Regulation) Act,1992 and the Customs Tariff Act, 1975.
- These Acts work in collaboration with each other and the customs duties and taxes are to be imposed as per the prescribed Acts.
- There are certain goods or commodities which can be imported to India without paying any customs duty, these are called free allowances. These duty free commodities may be edited from time to time by the Central Government. The commodities which are not included as duty free allowances are:
- Fire Arms
- Cartridges of fire arms exceeding the limit of 50
- Cigarettes exceeding 100
- Cigars exceeding 25
- Tobacco exceeding 125 grams
- Alcoholic liquor or wine exceeding 2 litres
- Gold or Silver in any form other than ornaments
- Any flat panel television be that Plasma or LCD or LED
Who Can Bring Gold and Electronics to India
Any legal passenger can bring a particular amount of commodities as prescribed under the Indian laws. The Indian citizens get an advantage over the others regarding the amount of goods which they can carry. An Indian citizen who is returning from UAE can bring a particular amount of gold and silver with him but for that there are certain conditions which are to be fulfilled. Apart from that, there are a number 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 less than 3 days can bring any commodity other than the ones which have been restricted, up to the value of INR 45,000.
- An Indian passenger or any passenger holding a passport issued under the Passport Act, 1967, can also bring a laptop with him without giving any duty for it apart from the goods included in 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 cannot 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 less than one year can bring a particular amount of jewelry with him or her, which shall be included in their baggage.
The amount is:
- Jewelry up to INR 50,000 in case of a male passenger.
- Jewelry up to INR 1,00,000 in case of a woman 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 bring up to 1 kilograms of gold but a duty is to paid for it. Earlier the limit was 10 kgs which has now been reduced to 1 kg.
- If any passenger brings more than the prescribed or allowed amount of gold then he will have to give extra custom duty for that which is a quite high.
For example, if an Indian passenger brings more than 1 kilogram of gold then for the 1 kilogram he will have to pay only 10% of the price of gold in Indian market and for the amount exceeding that, he will have to pay a heavy custom duty of 36.05% of the cost of gold as per the Indian market.
Effect of the New Laws and Rules
There have been new laws formulated both in India as well as in UAE regarding the import and export of goods or commodities from or to their country. Both the governments realized that there are a number of loopholes in the trading rules between the two countries which is giving the smugglers an opportunity to cheat and make money by illegally trading goods between the two countries.
The Indian government has made a big move to stop the illegal trading of gold and electronics between India and UAE. The Indian government has changed its rules related to the allowed limit of import and export of commodities.
- On 26th of August, 2013, the Indian government took a bold move and reduced the allowed amount of gold that an Indian passenger could carry to India from 10 kgs to 1 kg.
- Another move which the government made was to exclude television be that plasma or LED or LCD, from the duty free allowance list.
- The next move of the government was to hike the rate of exchange of gold and silver. There has been a continuous increase in the importing tax rates by the Indian Government.
The UAE government has also taken certain steps to prevent illegal trading especially of gold and electronics.
- The UAE government has also hiked the tax of exporting gold from the country. The export duty of gold from UAE or Dubai has been hiked to 5%.
Due to the fact that both the governments have made certain changes related to the import and export of gold and electronics from and to their countries, there has been a huge deviation in the amount of trade between the two countries. The hiked custom duties have made sure that there no longer remains a huge difference between the prices of gold and electronics in the two countries. Now the limit of commodities which can be imported without paying any duty has been reduced and this decision will support the businessman of India.
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