CBIC seeks inputs to combat ‘gift’ import duty loophole

  1. Recently,the Mumbai Customs department has stopped clearing parcels under the gifts and samples route.
  2. According to the Foreign Trade Act,gift items of a value of up to ₹5,000 received from foreign countries to people residing in India are exempted from customs duty.
  3. However,there is no cap on the number of gifts an individual can receive.
  4. E-commerce platforms especially from China has misused this rule to ship cheaper products to Indian customers as gifts,thus avoiding customs duty and goods and services tax.
  5. Central Board of Indirect Tax and Customs(CBIC) have asked domestic industry to come up with a detailed plan by the end of the month to plug these loopholes. 
  6. One of the suggestions being mooted is the imposition of a flat rate of tax and Integrated Goods and Services Tax to be applied on all items imported from e-commerce companies.This way,gifts can be distinguished from e-commerce purchases.
  7. Another approach is to integrate the payment portals of the e-commerce companies with the CBIC so that when a payment is made for a product that has to enter India,the CBIC has the barcode and other details it can match with the product when it physically arrives at a port of entry.