Black money: Govt to soon notify new limit for reporting gold transactions

October 8, 2017

New Delhi-India (Oct 8)  The government will soon notify a new threshold for reporting to authorities about transactions in gold and other precious metals and stones with a view to curb parking of black money in bullion, revenue secretary Hasmukh Adhia said.

The government had on Friday reversed its August order of bringing gems and jewellery dealers under the purview of the reporting requirement of the Prevention of Money Laundering Act (PMLA).

In an interview to PTI, Adhia said the 23 August order had to be rescinded because it created “confusion and a lot of negative sentiment” because no threshold for transactions to be reported was set.

“For the first time in India, we had notified that jewellers will be reporting entity (under PMLA) but what report they will submit to us that was not clear,” he said. This led to jewellers implementing the 23 August order on the line of banks where cash transactions of Rs50,000 and above are to be reported.

“And that affected sentiments. So, now we have to sit down and decide about it,” he said.

The decision to rescind the 23 August order is being seen as providing a big festive cheer for the sector and customers.

“The Rs50,000 is too onerous in case of jewellery. Cash deposit is different in bank where everything is electronic and easy to report. But, here they started implementing.

“Our notification (of August 23) only said that any jeweller with turnover of more than Rs2 crore will be the reporting entity. Rs50,000 requirement is in general rules,” Adhia said.

He did not clearly state if the requirement of PAN for jewellery purchases above Rs50,000 has been removed. “There was some confusion created, which has created a lot of negative sentiment. We will work on it. We will study what to do and we will again re-notify them as reporting entity but with what limit that we will decide. We will check with industry and decide soon,” the revenue secretary said.

Explaining the PMLA reporting rules, Adhia said all governments have financial intelligence units (FIU) and there is anti money laundering act in every country. PMLA is an anti money laundering legislation.

“PMLA says that anybody can be notified as reporting entity. So banks, insurance have to report. So, high value transactions of jewellers have to be reported,” he said.

Under the PMLA, every reporting entity is required to maintain record of all transactions of value exceeding Rs10 lakh, all cross border wire transfers of more than Rs5 lakh and all purchase and sale of immovable property of Rs50 lakh or more. Also, all reporting entities, like banks, financial institutions, are required to report cash deposits over Rs50,000.

The government has received representations from various associations in the gems and jewellery sector with respect to certain incongruities in 23 August notification, an official order said on Friday.

“After considering various aspects of the issue, the government has decided to rescind the said notification,” it said. “A separate notification after due consideration of points raised and wider stakeholder consultation in this regard, shall be issued separately.”


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