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India’s new gold duty hike sparks concerns over low duty-free baggage allowance

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08-Jul-2019

Dubai: The Indian Government’s move to hike import duty on gold from 10 to 12.5 per cent in its latest budget announced on July 5 has raised fresh concerns over the “low” baggage allowance for Indian travelers seeking to carry gold back home.
 
With gold prices going up in India thanks to the present total tax incidence of 15.5 per cent, including the three per cent Goods and Service Tax, the new price advantage in the UAE is expected to attract more buyers. However, with no change in the baggage allowance, travelling to India with the overseas purchases remains a huge challenge.
 
According to the Customs Guide for Travellers put up by the Indian Embassy in Abu Dhabi, “An Indian passenger who has been residing abroad for over one year is allowed to bring jewellery, free of duty in his bonafide baggage up to an aggregate value of Rs 50,000 (Dh2,683) in the case of a male passenger or Rs 1,00,000 (Dh5,366) in the case of a lady passenger.”
 
Indian expats, who traditionally wear gold jewellery and visit India frequently for weddings and other occasions, have long been complaining about the low limit, with claims of ‘harassment’ by customs officials to pay duty at Indian airports.
 
Susheela Raman, an Indian expat from Bengaluru who was travelling to her hometown for a wedding, recalled her harrowing experience upon landing at the airport. “Obviously, I was carrying some jewellery as I was attending a family wedding. One necklace and a pair of matching earrings I had was purchased here in Dubai. I was asked so many questions and told to pay duty, or else leave the items in a locker and collect them upon my return to the UAE. The baggage allowance is so low that even the smallest items exceed the permissable limit.”
 
Beena K, another Indian said, “These days, you can hardly get anything solid within the prescribed limits. It’s high time they increased the baggage allowance.”
 
Most jewellers in the UAE agree.
 
Chandu Siroya, managing director of Siroya Jewellers, said, “These limits were set when the gold prices were probably $400-500 an ounce. The price has now gone up to $1,300. It would be more prudent to set limits in terms of the weight or grammage rather than the price as the rates fluctuate all the time.”
 
According to Siroya, “India’s move in raising the import duty on gold to lower demand will not work. This is because Indians have a cultural affinity to gold. They usually buy gold when there is an occasion like a marriage or birth of a child. If they can afford it, they will buy more, if they can’t they will buy less. Basically, gold will be purchased at any price -- even when it went up to $1800 an ounce, there was demand.”
 
Vinay J. Jethwani, managing director of Meena Jewellers, said with prices being lower in Dubai, he expects sales to go up. “The appetite is bigger as Indians are calculative.”
 
He said, “The baggage allowance remains conservative. It should be more liberal.”
 
Industry sources fear the high import duty could affect the way people buy gold back home, with “more margins to work on unconventional routes”.
 
One retailer said, “As it is people who come in groups buy jewellery here and distribute the items among the group members to avoid paying duty. They also exchange old gold items for new and take them back.”
 

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