Gold smuggling causes Rs 2b revenue loss to govt

KATHMANDU, July 29: The government lost revenue of nearly Rs 2 billion in the fiscal year 2014/15 due to illegal imports of gold.

The government could not mobilize the targeted revenue after designated commercial banks failed to import gold as per the quota allocated to them in the fiscal year. Sources say banks did not import gold as per the quota in the review period, as jewelers turned to smuggled gold which is comparatively cheaper.

The government allows commercial banks to import a maximum of 15 kg of gold per day which is around 5.4 tons annually. Had the banks imported gold as per the quota, the government would have mobilized Rs 2.84 billion in revenue. But as the banks imported only 1,725 ​​kg, the government could mobilize only Rs 897 million in the review year.

Officials of commercial banks say their focus was on selling gold in their stock, which had been piling up after jewelers started acquiring gold from illegal channels, first.

"Jewelers are finally buying gold from us after the government reduced customs duty on gold imports," Saroj Guragain, chief financial officer of Sanima Bank, told Republica. "Earlier, jewelers were reluctant to buy gold from us as high import duty made gold import through formal channel expensive. They would acquire gold from illegal channel."

Statistics of Tribhuvan International Airport (TIA) shows that only 1,582 kg of gold was imported in the first 11 months of FY 2014/15. "Import of gold via TIA Customs Office in 2014/15 went down significantly compared to previous fiscal years," Bhupal Baral, chief custom administrator of TIA Customs Office, said. "Smuggling of gold and the government decision to allow overseas returnees to bring 50 grams of gold with them might have affected gold imports."

Jewelers say the government lost revenue from gold imports because of its failure to control smuggling of gold into the country. "It is true that some jewelers purchased gold imported through illegal channel which is comparatively cheaper," Tej Ratna Shakya, immediate past president of Federation of Nepal Gold and Silver Dealers Association, said.

Jewelers say gold purchased through illegal channel is cheaper by Rs 100,000 per kg compared to gold imported through banking channel.

Meanwhile, sale of golden jewelries is increasing significantly these days due to fall in price of the yellow metal in the domestic market, according to Shakya.

Source-myrepublica.com