Jewellers protest Rs 2-lakh cash sales limit

Yesterday, the finance ministry said PAN would have to be stated for a jewellery transaction above Rs 2,00,000 from January 1, down from the present Rs 5,00,000

The jewellery trade says it fears a substantial hit on sales with the central government’s latest directive on the requirement of a tax Permanent Account Number (PAN) for cash transactions.

On Tuesday, the finance ministry said PAN would have to be stated for a jewellery transaction above Rs 2,00,000 from January 1, down from the present Rs 5,00,000. At the current Rs 26,000 per 10g and average making charge of 15 per cent, no one would be able buy more than 60g of jewellery without giving their PAN.

The overall jewellery market is estimated at Rs 2,50,000 crore.

The trade says people do not wish to give a PAN for such purchase. And, says Ashok Minawala, Director, All India Gems and Jewellery Trade Federation, “in rural India, even large consumers do not have a PAN card, even if they buy jewellery worth lakhs on occasions like a wedding”.
 
Earlier, the government had issued a similar order for for PAN details for a cash transaction over Rs 1,00,000. The gems and jewellery sector was kept out of this after representations from the sector, on the high-value transactions in the segment. The government then raised this limit to Rs 2,00,000 for bullion and Rs 5,00,000 for a jewellery purchase.

“Instead of controlling black money on consumers, the government is focusing on jewellers. (This move) would hit the entire jewellery ecosystem, with direct bearing on the manufacturing sector,” said Minawala.

In America, which consumes 38 per cent of global production, the limit for jewellery purchase by cash is $10,000m translating to Rs 6,70,000.

“Sales of large-size ornaments would get a direct hit. This decision is a big blow for the gems and jewellery industry,” said Mehul Choksi, chairman, Gitanjali Gems, owner of some leading brands such as Nakshatra and D’damas.

Rajesh Mehta, chairman of Bengaluru based Rajesh Exports, says the industry body needs to take up this issue with the government. “Consumers want to buy jewellery through various legal means in cash. The Rs 2,00,000 limit means nothing for this sector,” he said.