The government will soon notify a new threshold for the value of transactions in gold, silver and precious stones such as diamonds which have to be reported to the authorities in order to check the diversion of black money into bullion, Revenue Secretary Hasmukh Adhia said.
The government had on Friday rolled back its order issued on August 23 which made it mandatory for gems and jewellery dealers to report all sales above Rs 50,000 to the financial intelligence unit as they were brought under the purview of the the Prevention of Money Laundering Act (PMLA).
Adhia told PTI that the August 23 order had to be rescinded because it created confusion and a lot of negative sentiment because no threshold for transactions to be reported was set. For the first time in India, we had notified that jewellers will be the reporting entity (under PMLA) but what report they will submit to us that was not clear, he said. This led to jewellers implementing the August 23 order in the same way as banks where cash transactions of Rs 50,000 and above are to be reported. And that affected sentiments.
So, now we have to sit down and decide about it, he said. The Rs 50,000 is too onerous in case of jewellery. Cash deposit is different in bank where everything is electronic and easy to report. But, here they started implementing. Our notification only said that any jeweller with turnover of more than Rs 2 crore will be the reporting entity. Rs 50,000 requirement is in general rules, Adhia explained.
"We will study what to do and we will again re-notify the as reporting entity but with what limit that we will decide. We will check with industry and decide soon," the revenue secretary said. A senior Income Tax official told Mail Today that the Rs 2 lakh limit on cash purchases notified by the department would stay in force even for bullion and jewellery purchases. The Income-Tax Department had in June this year warned people against indulging in cash transaction of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.
The newly inserted section in the Income Tax Act bans such cash dealings on a single day, in respect of a single transaction or transactions relating to one event or occasion from an individual. The Income Tax Department had also advised people having knowledge of such deals to tipoff the tax department by sending an email to blackmoneyinfo@ incometax.gov. in.
The government has banned cash transactions of Rs 2 lakh or more from April 1, 2017, through the Finance Act 2017. The waiving of the stringent PMLA rules is expected to give gold sales fillip during the festive season in the run up to Diwali as the earlier Rs 50,000 limit for reporting had dampened sentiments. Higher sales are expected on Dhanteras to be celebrated on October 17 this year. Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and sales normally shoot up in this period every year. and is largely celebrated in North and West India.
Gold prices were ruling firm at Rs 30,555 per 10 grams and silver at Rs 40,600 per kg in the national capital as of Saturday. This is a big relief and there could not have been a better Diwali gift than this for both jewellers and consumers, All India Gems and Jewellery Federation Chairman Nitin Kandelwal said, "we are expecting sales to revive after a lull in preceding months. We will be more than happy if sales remain normal during Diwali."
More than jewellers, consumers were affected with the notification as they were not comfortable showing PAN and Aadhaar documents, he added.