(Image source from: PAN card rule ensure transparency in jewellery business})
The central government's proposal to make Permanent Account Number (PAN) card mandatory for jewellery purchases above Rs 1 lakh in cash may lead to contraction in the industry and result in job losses in the sector, Titan Company managing director Bhaskar Bhat said. As part of a measure to curb the black money in the country, Finance Minister Arun Jaitley in his first full-year Budget proposed to make PAN card mandatory for cash purchases of jewellery above Rs 1 lakh. "The fear is that it will lead to the contraction of the jewellery industry as such, because a large part of the transactions are in cash and there are many reasons for this," said Mr Bhat. Jewellery purchase penetration is deep in the country, there are only 170 million PAN cards in the country and only 30 million income tax assesses, so expecting everyone who makes a cash purchase of above Rs 1 lakh to give PAN card is impractical, he added.
Making PAN card mandatory for cash purchases of jewellery above Rs 1 lakh will not affect branded jewellers like Titan, but it will mostly affect small jewellers as cash purchase is as high as 60-70 per cent for them. Titan believes that customers who make cash purchases of jewellery above Rs 10 lakh are more likely persons trying to avoid income tax assessors rather than a person who is buying jewelleries worth Rs 1 lakh. "We (Titan) are impacted less as most of the transactions are done through credit/debit card and cheque," the company said. The government should re-think the decision and revise the limit to Rs 10 lakh, jewellery businessmen asked.
Jewellery business in India is the most lucrative one, which has plenty of dubious transactions. Jewellery is the best investment arena for tax evaders. People with dubious income consider jewellery as the safe haven to convert their black money into white. The central government’s initiative to make PAN card compulsory for the purchase of jewellery is widely appreciated and considered as the right step in dealing with black money. Now the jewelers buy and sell products without any control or record. This has resulted in a very huge loss in lieu of taxes. Since no bill is issued customers cannot exercise their right when the purity of the gold is found to be less than what is said.