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Informist, Wednesday, Dec. 4, 2024

 

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--CBIC chairman:Crypto currency's rise calls for greater global surveillance 
--CONTEXT: CBIC Chairman Agarwal speaking at DRI's foundation day 
--CBIC chairman: More potential for illegal trade as intl mkts interconnect 
--Revenue secy to DRI: Must keep interest of econ over interest of revenue 
--Revenue secy: DRI must focus on catching whole smuggling syndicate 
--CONTEXT: Revenue secy Malhotra speaking at DRI's foundation day 
--Revenue secy: DRI needs to continue surveillance on gold smuggling 
--DRI head: Have to keep check on dumping, smuggling under free trade pacts 
--CONTEXT: DRI head Singh speaking at DRI's foundation day event 
--DRI head: Gold smuggling continues to be an issue
 

 

NEW DELHI – With the increasing interconnection between international markets, there is greater potential for illegal trade, including smuggling, money laundering, and tax arbitrage, Central Board of Indirect Taxes and Customs Chairman Sanjay Agarwal said Wednesday. While traditionally, trouble-inducing areas like smuggling continue to be an issue, the rising use of cryptocurrency calls for greater global surveillance, Agarwal said at the Directorate of Revenue Intelligence's 67th foundation day event.

 

"Money laundering, tax evasion, and the circulation of illicit funds distort markets, weaken currencies," the Directorate of Revenue Intelligence said in its 'Smuggling in India report for 2023-24', released at the event.

To tackle this, the Directorate of Revenue Intelligence must constantly improve its technology-driven intelligence and aim to bust the "whole syndicate" rather than "scratching the surface", said Revenue Secretary Sanjay Malhotra, who was also present at the event. 

Mohan Kumar Singh, Principal Directorate General of the Department of Revenue Intelligence, said that in the recent past, smuggling of precious metals, especially gold, has become rampant and continues to be challenging to tackle. Many traders take the opportunity of concessions under free trade pacts, make use of tax arbitrage, and evade customs, Singh said. Owing to this, in 2024-25 (Apr-Mar) so far, the revenue department's intelligence body has detected tax evasion to the tune of INR 100 billion. 

 

According to the report, in FY24, the Directorate of Revenue Intelligence booked 50 cases involving the misuse of trade agreements, the highest being 33 under New Delhi's free trade agreement with the Association of Southeast Asian Nations. Trade officials from India and ASEAN held negotiations last month to review the existing free trade agreement signed in 2009. The two sides aim to conclude the review process in 2025.

 

According to the report released Wednesday, in FY23 and FY24, India's gold imports saw a significant surge, totalling 26 tonnes, largely driven by gold jewellery imports benefiting from the ASEAN-India trade pact. As the imports were not from traditional sources, this rapid growth prompted closer scrutiny. Following this, in August 2023, DRI booked a case against three importers for allegedly misusing the import benefits to bring in gold jewellery valued at INR 306 billion, it said. 

 

In the recent past, India's Comprehensive Economic Partnership Agreement with the United Arab Emirates has also gained significance in this regard. India signed a Comprehensive Economic Partnership Agreement with the UAE in 2022, under which duty on gold and silver imports will be gradually reduced to nil over 10 years. In other words, the zero-tariff policy under the Comprehensive Economic Partnership Agreement is likely to shift all of India's precious metals, gems and jewellery imports to the UAE.

 

According to a report by the Global Trade Research Initiative, the Comprehensive Economic Partnership Agreement with the UAE could lead to a significant revenue loss for India – estimated at INR 630 billion – and disrupt domestic business. In FY24, India and the UAE had a total trade of $83.64 billion – $35.63 billion of exports and $48.02 billion of imports.

 

"DRI must continue their surveillance on gold smuggling," Malhotra said. "During the financial year 2023-24, DRI seized 1,319 kg of gold, with land route contributing 55% of the seizures and air route contributing around 36%," the report said.

 

While the department's job is to hunt down tax evaders, Malhotra said that at the time of investigation, field officers must keep the interest of the economy and business environment above the interest of revenue. He said that the department, while addressing tax evasion, must understand the intent of the evasion--if it is intentional or if it is simply owing to misinterpretation of tax laws. "While customs duty collections form a part of government's total tax collections, the government should not hurt the industry and thereby become a deterrent to businesses," he said. 

 

In FY25, the government aims to collect INR 2.377 trillion from customs duty.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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