Indian Revenue Department tightened baggage rules to curb illegal Gold Import

Union Government of India (Indian Revenue Department) on 6 March 2014 tightened baggage rules for inbound Indian passengers. According to the step, the passengers will have to provide details of source of funds for importing the metal as well as the air tickets. The baggage rule has been tightened to check gold smuggling in the country and to prevent misuse of gold import facility.

Circulation issued by the Revenue Department circular says that
• The baggage receipt that is issued by the customs will include engraved serial number on gold bars
• The Central Board of Excise & Customs directive has said that the passengers bringing gold in any form, which includes ornaments, will have to declare item-wise inventory that is being imported with baggage receipt

These norms have been revised and tightened following sudden increase (spurt) in import of gold by eligible passengers via airports in the country.

This rule has been hardened as the eligible passengers (Persons of Indian Origin or an Indian returning to India after a period of six months of stay abroad) are allowed to import gold up to 1 kilogram by paying 10 percent customs duty in foreign currency. The passenger should be a passenger who holds a valid passport issued under the Passport Act, 1967.
   
Background
In recent past, the Reserve Bank of India and the Union government have expressed concerns over the sudden increase of import of gold in the country. These increases were also felt even after measures taken by them to curb import of gold to reduce the widened Current Account Deficit (CAD).

Steps taken to curb excessive import of gold to the country were
• Import duty of 10 percent in 2013
• Linking the imports to exports under the 20:80 scheme

Analysis
Tightening of baggage rules have been done even after imposition of 10 percent amount on gold import may be because this step would have triggered gold smuggling in recent past. The eligible passengers have been targeted by the government as smugglers hires eligible passengers or NRIs to import gold in the country.