The jewellery trade has urged the Union government to exempt the sector from the requirement of consumers providing their tax Permanent Account Number (PAN) for any purchase over Rs 100,000.
Under the Income Tax Act, cash purchase of jewellery worth over Rs 500,000 and bullion (coins and bars) require one’s PAN. Last month, in his Union Budget proposals, Finance Minister Arun Jaitley proposed it for any cash purchase over Rs 100,000.
Jewellery retailers fear massive loss of business. “The proposal is impractical. Any ornaments with over 30g of gold would come under this net. Denial of sales would neither be good for jewellers nor for the economy,” said Ashok Minawala, Director, All India Gems & Jewellery Trade Federation, which says it represents about 600,000 jewellery makers, traders and retailers.
Domestic sales of jewellery is estimated at Rs 250,000 crore a year, of which rural sales comprise 70 per cent. And, notes the trade, most rural households and farmers do not possess a PAN card. Minawala says the government has so far issued 140 million of PAN numbers, around 11 per cent of India’s population. “But, our customer base is 100 per cent, as even the smallest village has a jeweller,” he said. The Budget measure would drive the grade underground, to the unorganised sector, he said.