Purchases worth over ₹6 lakh likely to come under scanner
NEW DELHI: Though cash transactions are banned above ₹2 lakh, recent data shows that accountants are being used to creatively flow black money through the legal banking channels... AN ED OFFICIAL
Retailers will soon have to report purchases above ₹600,000 to the Financial Intelligence Unit (FIU), said a government official working on the proposal which is targeted at preventing money laundering.
This limit will mainly be applicable on jewellery and luxury goods.
“Globally, in most countries, the limit for reporting such transactions is set at $10,000,” added the government official who spoke on condition of anonymity. “Discussions are on to decide the limit, with consensus veering around ₹6 lakh.”
Apart from helping government agencies such as the Enforcement Directorate (ED) detect instances of money laundering (when this information is used along with other information), these reports could also help the Income Tax department identify individuals whose purchases are disproportionate to their known sources of income.
The NDA government has announced several steps to crack down on black money and money laundering, including deregistering shell companies which exist solely to facilitate such transactions, and strengthening the Benaami Transactions Act.
The government has already barred cash transactions above ₹2 lakh. And any transaction of ₹50,000 or above has to be supported with the PAN number of the buyer, although many sellers get around this.
The government, in a notifica- tion issued on August 23, 2017 had mandated gems and jewellery dealers to report their transactions, but the notification was withdrawn in October because no threshold was set for reporting transactions and gems and jewellery dealers voiced the inconvenience caused .
Under the Prevention of Money Laundering Act, reporting entities such as banks and financial institutions are required to maintain record of all transactions over ₹10 lakh, all cross border wire transfers of more than ₹500,000 and all purchase and sale of immovable property of ₹50 lakh or more.
Post-demonetisation banks are also required to report cash deposits over ₹50,000.
“Though cash transactions are banned above ₹2 lakh, recent data shows that accountants are being used to creatively flow black money through the legal banking channels. A threshold for reporting purchases will help us track cases of disproportionate assets, corruption money , and frauds,” an ED official said.