ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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THE BUDGET-Axe on Investment

Smuggling Continues A RECENT report of the customs authorities uncovering an attempt by an NRI to smuggle some 10 kilogrammes of gold inside a small airconditioner compressof goes to show that gold continues to be illegally imported in spite of the fact that import of gold is now permitted. Under the scheme announced in the budget speech, returning Indians and NRIs are permitted to import up to 5 Kilogrammes of gold per passenger on payment of a modest import duty of Rs 450 per 10 grammes in foreign exchange. Obviously, even this duty of approximately 15 per cent is sufficient to motivate smuggling of gold. It is noteworthy that the person reported to have been apprehended smuggling gold in the compressor was none other than an NRI, i e, one belonging to the category of persons permitted lo import gold. So when people argue in favour of reduction of tax rates on the grounds that modest tax rates will induce people to pay up the amounts due, they make a basic error of judgment about how the calculus of costs and benefits of tax evasion operates.

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