Jewellery traders resist mandatory PAN for Rs 1 lakh transactions

Industry body says move will impact business turnover as large nummber of customers come from rural areas who do not have PAN cards

The All India Gems and Jewellery Trade Federation(GJF), the national trade federation for the promotion and growth of trade in gems and jewellery (G&J) sector across India, today expressed strong dissatisfaction over the recent government move of mandatory requirement of permanent account number (PAN) card details on any transaction above Rs 1 lakh, claiming that it would have a significant impact on the industry turnover as a major section of customers come from rural areas who do not have PAN cards according to GJF.

Speaking here, Haresh Soni, chairman, GJF, said, “This is not practical and will discriminate 70 per cent of the rural buyers as they are not under tax net and do not have PAN cards.” When asked what percentage of total retail sales are of ticket-size of above Rs 1 lakh, Soni claimed that nearly 70 per cent of the customers nowadays buy above Rs 1 lakh thanks to the steep rise in gold prices.

“One can only buy as much as 30-32 grams of gold ornaments for Rs 1 lakh, (which is roughly 3 tola according to traditional measure), and whenever buying for any occasion like marriages etc, the ticket size obviously exceeds Rs 1 lakh easily,” he explained. According to GJF, around 65-68 per cent of buyers come from rural areas, and organised retailers are all up in arms against the recent government move. The association, which is also lobbying for a 'council' status so that it has more government representation, is asking for the bar to be raised to Rs 10 lakh per transaction to ask for a mandatory PAN.

He, however, ruled out any plans of retailers going on a strike to protest the government move.

The government move has been widely seen as a way to reign in the black money circulating in the gold trade business, and the GJF has claimed in its statement here that, “The high import duties have promoted smuggling and this new measure shall in no way stop generation of black money.” The association rather is lobbying for bringing down the import duty on gold from a current 10 per cent.

“The delay in lowering duty on gold only hamper our economy as black money will be generated and parked in gold. Government will require to come up with more trade friendly policies where industries can develop and grow to build the economy,” Soni said here.

Zaverilal V Mandalia, regional chairman, GJF, said, "It is a negative step for the industry as this would neutralise benefits arising out of monetisation scheme which is positive. As of last year, there are more than 140 million PAN cards issued in India. It is not justifiable to ask for a pan card to approximately 89 per cent of the population who do not possess one."

Talking about the issue of gold import and the current account deficit (CAD), Manish Jain, Chairman-elect, GJF, said, "We hope that Union Finance Minister addresses the important issue of reduction of import duty on gold which has given rise to creation of parallel economy through smuggling of gold. The FY 2015 CAD / GDP ratio is presently around 0.9 per cent and is estimated to reduce to 0.3 per cent in the next year. We expect import duty reductions on gold soon.”

GJF, however, welcomed steps like  the gold monetising scheme and indigenous manufacturing of gold coins with symbol of Ashoka Chakra.

GJF represents over 6,00,000 players comprising manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and allied services to the domestic G&J industry.