Tougher norms for high-value gems and jewellery transactions on cards

The finance ministry is considering proposals to sharpen its focus on high-value transactions in the gems and jewellery sector, among others. One suggestion is to link these with the Aadhaar card number (which every citizen is expected to have) or other identity. Preliminary discussions have taken place, said an informed source. Aadhaar is considered better for this purpose than the idea of a PAN (income tax) number.

After the demonetisation in November 2016 and implementation of the goods and services tax from July 2017, all commercial activities are sought to be tracked in a systematic manner. Even so, a need is felt to review some of the provisions on such transactions.
 

Given misuse of PAN card numbers in the past in jewellery deals, a recent proposal is to manadate use of Aadhaar, with one-time password verification.

 

Last July, the import duty on gold and silver was raised from 10 per cent to 12.5 per cent. This was resisted by the trade and is said to have resulted in more of smuggling. Hence, a proposal now to make gem and jewellery dealers a reporting entity under the Prevention of Money Laundering Act (PMLA). Such a requirement had been imposed in August 2017 (for reporting transactions over Rs 50,000) but had been withdrawn in two months dur to operational issues. 

“The earlier attempt on this created confusion. While rescinding this in October 2017, the government promised to notify under the PMLA a new threshold for reporting to authorities about transactions, with a view to curb parking of black money in bullion. This commitment, under the Financial Action Task Force, is yet to be realised,” said Arjun Raghavendra M, a Delhi-based advocate who previously worked for the government.

Globally, the sector is considered a high-risk one in the context of money laundering and terrorism funding. In India, though, the sector also generates high employment.

For high-value transactions, the new threshold is expected to be more liberal than the earlier one of Rs 50,000 limit where the PMLA is concerned.