TOUGHER NORMS FOR HIGH-VALUE 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 Aadhaar or another ID proof. Preliminary discussions have taken place, said a source.

Aadhaar is said to be preferred over PAN (income tax). After demonetisation of high-value currency notes and implementation of the goods and services tax, all commercial activities are sought to be tracked in a systematic manner.

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 Aadhaar or another ID proof. Preliminary discussions have taken place, said a source. Aadhaar is said to be preferred over PAN.

After 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 the misuse of PAN in the past in jewellery deals, a recent proposal is to mandate the use of Aadhaar, with onetime password verification.

Last July, import duty on gold and silver was raised from 10 per cent to 12.5 per cent. This

was resisted by traders and was said to have resulted in more smuggling.

Hence, a proposal has been mooted to bring gem and jewellery dealers under the ambit of the Prevention of Money Laundering Act (PMLA).

Such a requirement had

been imposed in August 2017 (for reporting transactions over ~50,000), but was withdrawn two months later due to operational issues.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 Delhibased advocate, who previously worked for the government.

Globally, the sector is considered high-risk 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 ~50,000 limit, where the PMLA is concerned.