Importing Gold In India: Rules, Entities, Taxes: India is a significant market gold market globally, but interestingly India does not produce a significant amount of gold and it can meet large domestic demand. India is the second-largest importer of gold in the world after China. The country imports gold in the form of gold nuggets, which are managed by the Reserve Bank of India (RBI), the central bank. Amid the epidemic, India imported $ 34.6 billion worth of precious metals in the last financial year, compared to $ 28.2 billion in the previous fiscal. This year too, India has increased its gold imports sharply, although prices have been frozen more than previous prices.
According to the latest union budget, gold now attracts a 7.5% tariff, down from the previous 12.5%. Indians import bulk gold and FM Nirmala Sitharaman took the decision implemented this financial year to keep the price under control. However, India now imposes a separate 2.5% tax on gold.
Who can import gold in India?
The Directorate of Foreign Trade (DGFT) has announced the list of companies that can import gold into India. A person of Indian descent holding a valid passport can import gold only after obtaining a DGFT license. The following is a list of companies that can import gold into the domestic market:
Metals and Minerals Trading Corporation Limited (MMTC)
Handicraft and Handloom Export Company (HHEC)
Project and Equipment Corporation Limited (PEC)
State Chamber of Commerce (STC)
Diamond India Limited (DIL)
Gem & Jewelry Export Promotion Council (G&J EPC)
Star Trading House (for Gems & Jewelery sector only) or Premier Trading House
Any other company recognized by the RBI
For yellow metal goods, importers are required to submit their usage report and supporting credentials to the Central Excise Office, India. The Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance confirms gold import regulations in India. This year, the CBIC, in the public interest, has exempted gold and silver imported from the Agricultural Infrastructure and Development Chess (AITC) under the Export Promotion Scheme.
Returning Indians can return to India for more than 6 months and import gold but pay tax on convertible foreign currency. Major banks like SBI, including a few foreign banks, are allowed to import gold and silver on normal duty.
Restrictions on gold imports
Indian companies are required to import gold in the form of gold nuggets, and the form of coins and medals is prohibited by the RBI. Yellow metal imports should only be shipped through custom bonded warehouses. A company cannot import more than 10 kg of gold (including jewelery) per passenger. Companies under the SEZ and EOUs, Premier, and Star Trading House are allowed to import gold only for export, not for any other purpose. Gold jewelry inlaid with stones and pearls is not allowed.
To import gold, companies can check the schemes offered by the State Trade Corporation of India (STC), a trade union government body; STC imports 100g and 1kg bars with a purity of 0.995 and 0.999, for traders or jewelry manufacturers.
Which country exports gold to India?
Switzerland, Saudi Arabia, and China are the major exporters of gold to India. In earlier years Middle Eastern countries were always the main source of gold for India. However, Switzerland, in the last financial year, increased its imports of gold, strengthening its position as one of India’s most important importing partners and making Saudi Arabia India’s 4th largest import partner. Gold imported from Switzerland accounts for almost half of India’s total gold imports. On the other hand, Dubai, the city of gold, is also a significant destination for gold imports from India.
Gold under government reserves
RBI’s sovereign gold bond program, strong incentives for gold ETFs, and digital gold purchases have eased demand for gold slightly. Rising gold prices have affected investors to focus not only on gold jewelry but also on long-term returns from gold. But in the case of digital gold or SGP, the Reserve Bank has to store gold in gold warehouses. Therefore, to meet the increased demand, the Reserve Bank of India