New threshold for gold transactions will be provided soon
In the last GST meeting, the Centre revoked the order that it had issued on August 23, where it had notified jewelry dealers that they were required to report on buyers, who make purchases beyond a certain limit. Now, revenue secretary Hasmukh Adhia has said, Centre will announce a new threshold for notifying authorities about gold, precious metals, and stones purchases soon. Here's more.
What is it all about?
Keeping in mind the need to stop hoarding of black money in the form of bullion, the upcoming threshold will be decided. The August 23 order, which made gems and jewelry dealers comply with the reporting requirement of the Prevention of Money Laundering Act, was revoked by the government, as it had created "confusion and a lot of negative sentiment," said Adhia.
What went wrong?
Adhia said, "We had notified that jewelers will be reporting entity but what report they will submit to us that was not clear." Thus, jewelers believed it was similar to that of banks, where cash transactions of Rs. 50,000 and above are reported to the respective authorities. Adhia said, "That affected sentiments. So, now we have to sit down and decide about it."
Lost in translation?
Adhia said that it's easy for the banks to report, as everything is carried out electronically there. However, reporting Rs. 50,000 worth transactions is a difficult feat for jewelers. Clarifying the conclusion he said, "Our notification only said that any jeweler with the turnover of more than Rs. 2 crore will be the reporting entity. Rs. 50,000 requirement is in general rules."
New threshold coming soon
However, Adhia has not confirmed yet, as to whether or not the Centre has revoked the requirement of PAN for purchasing jewelry above Rs. 50,000. The revenue secretary said, "We will study what to do and we will again re-notify them as reporting entity but with what limit that we will decide." This will be done in consultation with the concerned industry.
PMLA is not out of the ordinary
Adhia mentioned that every government has its own financial intelligence units and an anti-money laundering act in place and the Centre's PMLA is not different from those measures. "PMLA says that anybody can be notified as reporting entity. So banks, insurance have to report. So, high-value transactions of jewelers have to be reported," revenue secretary said.
Prevention of Money Laundering Act
PMLA or Prevention of Money Laundering Act requires every reporting entity to keep a track of all transactions exceeding Rs. 10 lakh in value, the sale of real estates worth Rs. 50 lakh or more, and overseas wire transfers of more than Rs. 5 lakh. Cash deposits of over Rs. 50,000 are reported by entities, such as banks and financial institutions.