How jewellers misused the 80:20 gold import scheme for money laundering
An 80:20 gold import scheme that was launched under the tenure of former finance minister, P Chidambaram was allegedly misused by jewellers including Nirav Modi, members of the Public Accounts Committee have found.
The scheme was misused for money laundering, the committee has found. The Revenue secretary and top officials of the Enforcement Directorate (ED), the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) appeared before the PAC's sub-committee headed by BJP MP Nishikant Dubey today.
In August 2013, the then UPA government had introduced the 80:20 rule, which said traders would be allowed to import gold only after they had exported 20 per cent of gold from their previous import. The rule was scrapped in November 2014 after the NDA came to power.
The members discussed a CAG report of 2016 which, they said, pointed out that the scheme resulted in a loss of over Rs 1 lakh crore to the exchequer, a source who was present at the meeting said on the condition of anonymity.
They also raised questions about the then Finance Minister P Chidambaram, under whose tenure the scheme was launched, and said even the CAG report had said to support the earning of one US dollar (around Rs 60 then) for jewellers, the government had to bear the expenditure in the form of duty foregone of Rs 221.75.The members also demanded that the Finance Ministry and the Reserve Bank of India share all notings and details related to this gold import scheme with the panel.
The report of the Comptroller and Auditor General clearly indicated that the scheme was used by jewellers including Choksi for "round-tripping of black money and money laundering", Dubey said at the meeting, claiming that it seemed P Chidambaram was aware of this.
Through the process known as round-tripping, black money that goes out of the country returns as white money.Members asked the ED director, CBDT and CBEC chairmen and Revenue secretary to share all file notings with them and also probe the possible linkages between the scheme and the PNB fraud.