The All-India Gems and Jewellery Trade Federation (GJF) says the Centre’s imposition of the requirement of a PAN card on any transactions of Rs 2 lakh and above is likely to affect rural demand.
The All-India Gems and Jewellery Trade Federation (GJF) says the Centre’s imposition of the requirement of a PAN card on any transactions of Rs 2 lakh and above is likely to affect rural demand. The federation which has opposed this move has sought meetings with the prime minister, finance minister and finance secretary, and maintained that they are likely to be given a hearing in the next few days.
The federation also says that a newly-tweaked gold monetisation policy is likely to be out soon, which could involve jewellers as collection agents. In the new scheme, the jeweller would go through the know your customer (KYC) norms, collect precious metal, and be authorised to issue a certificate of authentication.
According to G V Shreedhar, chairman, GJF, around 70% of jewellery buyers come from rural areas, and do not fall into the tax net or have pan cards, which could impact buying. “We urge the government to remove the Pan card requirement in the jewellery sector and maintain status quo on the the application of TCS on the sales of bullion on Rs 2 lakh and on Rs 5 lakh of jewellery,” Shreedhar said.
The government must either exempt gems and jewellery from the requirement of Pan cards or increase the limit to Rs 10 lakh, or apply the standards prevalent in the US, where the purchase of $10,000 is permitted without such requirements, he said. A move of this nature will encourage the unorganised sector and the organised sector will die, he added. “This industry, which is in the size of Rd 2,50,000 crore, has 70% of its business coming from rural buyers. This sector has been contributing 3.5% to the country’s GDP and therefore the government needs to be considerate and fair,” Shreedhar said.
Ashok Minawala, director, GJF, said that jewellers will begin facing problems of encouraging buyers to visit showrooms because of the new restriction. It is a negative step for the industry as this would neutralise benefits arising out of monetisation scheme which is positive. As of March 31, 2015, there are approximately 22.3 crore PAN cards issued in India. “The government first needs to widen the pan card base and then bring in such steps gradually,” he said.
On the gold monetisation scheme, Shreedhar pointed out that jewellers have been very supportive and after the dynamics are worked out the scheme could soon gain momentum.