Aiming to plug the existing loopholes that had arisen due to the recently launched GST regime, the government has restricted gold and silver imports from South Korea. It was noticed that gold traders were taking advantage of the recent GST changes, which allowed them to avoid paying the customs duty on gold and silver imports. India is the world’s second biggest consumer of gold. At first place is China. At present, a 10% import duty is imposed on gold and silver, but this does not apply to imports from countries with which India has Free Trade Agreements (FTAs). South Korea is one such country with which India has free trade agreements. Earlier, a 12.5 percent excise duty was imposed on gold and silver imports from FTA countries, but this was scrapped after GST was launched on July 1.
Since that time, many trading houses have been taking undue advantage of loopholes present in the system. Many of them started importing gold and silver from South Korea, since it did not require them to pay any taxes. Now, the government has realized the loophole that is present and has issued a notification saying that the provisions available under FTA will not apply to gold and silver imports from South Korea. This means that traders will now have the pay the taxes, as may be chargeable to imports from countries not covered under FTA.