When the Government brought dealers in precious metals and precious stones under the purview of the Prevention of Money Laundering Act in mid-February, there was much trepidation about what this would do to booming jewellery sales.
This meant that jewellers would have to comply with Know-Your-Customer (KYC) norms for transactions above Rs 50,000 and customers to submit their Permanent Account Number details whenever they bought jewellery valued at over Rs 50,000.
But two months on, no one in the trade seems to be overly impacted by this.
Enquiries by customers, with jewellers, big and small, show that this rule isn’t being implemented at all. Jewellers in Chennai claim that they hadn’t received any formal intimation of this move and were unclear about the actual applicability of these rules. Jayantilal Challani, President, Madras Jewellers and Diamond Merchants Association, said: “The norms are not yet implemented”.
This seems to be the view of jewellers across the country. Delhi-based PC Jeweller says: “To the best of our knowledge and belief, till date there are no new KYC norms for purchases above Rs 50,000.”
Even if the Government is keen to bring in such norms, a limit of Rs 50,000 is too low and impractical, say jewellers. Some 20 gm of gold would cost more than the proposed threshold, they said.
They said that even customers from lower-income groups, who may not have PAN cards, buy more than this quantum. Jewellers said that they have made a representation to the Finance Ministry and are hopeful of getting relief. Pending this, it will continue to be business-as-usual, they said.
Currently, jewellers ask for a copy of the customer’s PAN card only if the purchase value of jewellery exceeds Rs 5 lakh or that of bullion (excluding coins or articles weighing 10 grams or less) exceeds Rs 2 lakh. On such purchases, tax is collected at source at one per cent.
But some jewellery buyers said that the shops do offer to split the invoices, with different names to help buyers circumvent the PAN card requirements and save on the tax collected at source.