Take your PAN card along when buying jewellery above Rs 2 Lakh
The central government has recently issued a directive making it mandatory for a buyer to produce a PAN card for jewellery purchases above Rs 2 lakh. This directive leaves in its wake a path of havoc as far as the organised jewellery sector in the country goes. The primary concern is the loss of a significant market size.
The main idea behind this ordinance, which came into effect on January 1, 2016, is to control black money. However, most jewellers and apex bodies are quite sceptical about the move. Those who do not possess PAN cards may now opt for non-hallmarked gold and this money will not be declared to authorities, thus going unaccounted for. It will also increase the amount of gold in people’s hands that is not of assured quality.
Currently the jewellery market size in the country stands at a formidable Rs 3,50,000 crore, with as high as 55 per cent of the market being controlled by the unorganised sector.The organised market share is pegged at Rs 1,57,500 crore. Trade officials believe that the move can result in a share as large as Rs 34,650 crore moving to the unorganised jeweller’s sector, resulting in unscrupulous trading (unorganised jewellers is a reference to those selling gold without a hallmark or standardised operations).
The organised jeweller market in India has been growing at a steady pace of around 15 per cent. A move like this can result in a serious dip in purchases of gold above Rs 2 lakh at one go, considering how a large number of people do not possess PAN cards. The immediate result of this will be an increase in the number of off-the-books transactions that will take place in the unorganised sector.
Through it all, it will be the rural markets that will suffer the most since a majority do not possess PAN cards. This despite the fact that overall, around 23 crore PAN cards have been authorised till date.