THE Baggage Rules, 1994 provided duty free allowance for import of new articles to an Indian resident passenger arriving from abroad upto a value of Rs 6000/-. This baggage free concession was periodically increased and as per the existing Baggage Rules, 1998 (as amended) the duty free allowance is Rs 35,000. However, the duty free allowance for jewellery has remained unchanged since 1994.
As per Baggage Rules 1998, in addition to the duty free allowance of Rs 35,000/-, a passenger who has been residing abroad for over one year and is returning to India is entitled to import free of duty jewellery upto Rs 10,000/- in the case of a male passenger and Rs 20,000/- in the case of female passenger.
Rule 6 of the Baggage Rules 1998 reads as follows:
Jewellery. - A passenger returning to India shall be allowed clearance free of duty jewellery in his bonafide baggage to the extent mentioned in column (2) of Appendix D.
APPENDIX -D
(See rule 6)
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(1)
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(2)
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Jewellery
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Jewellery
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Indian passenger who has been residing abroad for over one year
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(i) Jewellery upto an aggregate value of Rs. 10,000 by a gentleman passenger, or
(ii) Upto aggregate value of Rs. 20,000 by a lady passenger.
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The value limit of jewellery under Baggage Rules 1994 was same except that the male passenger and female passenger referred therein have now been addressed as a gentleman passenger and a lady passenger under the Baggage Rules 1998.
India has the highest demand for gold in the world and more than 90% of this is acquired in the form of jewellery. The bulk of the Indian jewellery buying is still rooted in tradition. With Dubai jewellery shops loaded with glittering gold, one may be tempted to buy some ornament. But at the prevailing international gold prices a gentleman becomes eligible to import free of duty jewellery not more than 4 grams valued at Rs 10,000/- and 8 grams valued at Rs 20,000/- in the case of a lady passenger. In 4 grams a gentleman may not be able to purchase even a ring. The lady may be able to buy a gold ring or a nose ring, bangles are out of question.
Now, in contrast with the gold rates prevailing during 1994 to 2000 it was possible for the gentleman passenger to bring 25 grams of gold jewellery and a lady passenger 50 grams . The past 7 years have witnessed phenomenal increase in gold prices. Consider the following table of prices ( prices shown are indicative )
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Year
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Gold/ 10 gm in INR
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1994
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4,600
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2000
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4,400
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2005 |
7,000 |
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2010 |
18,500 |
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2011 |
26,400 |
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2012 June |
30,000 |
Gold has broken all previous records and crossed Rs 30000/- mark per 10 grams in tune with global prices. Thus, it would be appropriate to have the jewellery free allowance Rule weight based instead of value based in order to offset rising gold prices and foreign exchange fluctuations. Further, the restriction of passenger residing abroad for over one year may be removed under Rule 6. This will help an Indian tourist going abroad to do a bit of purchase in gold jewellery.
Impact of Rate of Exchange on Purchase vis-à-vis Duty Free Allowance:
The data for the last one year shows that the Indian Rupee has depreciated against all major currencies of the world. The rate of US dollar rose by Rs.12 and it is fluctuating these days. In July 2011 rate of exchange was around Rs.44 against a USD and in June 2012 it is around Rs.56.
In the Union Budget 2012-13, presented on 17-03-2012, the duty free allowance was increased to Rs.35,000 from Rs.25,000.(Ref. Rule 3 of the Baggage Rules, 1998). In fact, the effective increase in the free allowance is only Rs.3000. This can best be explained with an example.
Assume that an Indian traveler in July 2011 decided to buy goods with Rs. 25,000. He could have bought the goods abroad worth USD 568 and on arrival availed the full duty free allowance. Assume that the same traveler spends the same USD 568 in June 2012 to purchase the same basket of goods. In terms of Indian Rupees he has spend Rs.31,800. The essence is that the exchange rates affected the buying power of the person. Coming back to the duty free allowance, it implies that the increase in allowance by Rs.10,000 has in fact only taken care of the depreciation of the Rupee to a great extent.
Baggage free allowance of Rs 35,000/- is eligible to a passenger returning after stay abroad of more than 3 days. It is possible for a person to attend a business meeting in Singapore or China and return India within 72 hours after purchasing some gifts and souvenirs for relatives and friends. The Duty free shops at international airports display variety of goods for sale. Hence the restriction of time limit 3 days may not be necessary. Further no distinction should be made between an adult and minor passenger like the jewellery Rule number 6. One or two branded items are sufficient to consume the free allowance of Rs.35,000.
The Baggage Rules 1998 could further be simplified.The obsolete items like VCR and VCP deserve no place in the Baggage Rules today. (Ref. Annexure III to the Baggage Rules). The Baggage Rules under CBEC website is visitedby all interested travelers world over. It needs to be updated. Under the Baggage Rules the free allowance is still shown as Rs 25000/- instead of Rs 35000/-.
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