To avoid gold transactions going underground, a committee of Reserve Bank of India (RBI) has recommended the government to set up an electronic gold registry to record every purchase of gold.
As per reports, a panel of financial regulators has proposed that PAN card should be made compulsory for all gold transactions from jewellers. In 2016, the Indian government set up a policy stating that any consumer who purchases gold valued over Rs 2 Lakh would be required to submit his/her PAN details.
Now, the panel wants the PAN card requirement rule to be extended for all gold transactions made by the jewellers. The committee also observed that about 11% of total assets of Indians are in the form of gold as compared to just 0.4% in China. This move will help prevent malpractice of private importers of gold.
The panel, chaired by Financial Economist Tarun Ramadorai, Indians households should release some of their gold holdings and invest them in financial assets that give them better returns. The panel of financial regulators also proposed that the gold bonds, issued by RBI must have an additional option. Not just in cash, but gold can also be redeemed to increase its acceptability among traditional investors who prefer asset tangibility.
People in rural areas invest in gold as a measure of future security. This move will impact on gold trades and cause discomfort to rural population who do not have PAN cards. In towns and cities, purchasing of gold is made as a prestige issue, and some buy gold just to escape from paying taxes.
Manoj Soni, a city-based jeweller “We will lose our customer base, as many regular customers do not have PAN cards.” However, some jewellers believe that the move will benefit the industry at large. “In business-to-business transactions, GST returns are mandatory, and PAN card is a must,” said Ashish Jhaveri, a city-based jeweller.