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- Recently,the Mumbai Customs department has stopped clearing parcels under the gifts and samples route.
- 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.
- However,there is no cap on the number of gifts an individual can receive.
- 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.
- 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.
- 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.
- 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.
