KOCHI: When it comes to buying gold people in India wants to be deceptive, it seems. Now it is mandatory to quote PAN number for gold purchases of Rs. 2 lakh and above. But in order to bypass the rule, customers are increasingly under-quoting the actual value of purchases, resulting in an illegitimate market in the country.
The trend, which is hurting organised players, will have huge repercussions as 90 per cent of the jewellery sales in India happens in the unorganised sector.
“Unregistered jewellers are selling gold without bill and now many customers prefer this option. This is affecting organised players in the sector as they want to do the business legally. The government should ensure that Jewellers are giving receipts to customers and taxes are being paid by jewellers.,” said B Girirajan, Managing Director, Bhima Jewellery. He added that customers should ask for bill otherwise it will be difficult for them to sell it in future.
Experts point out that many jewellers take the illegal route as the total taxation (import duty, excise duty and VAT) on the yellow metal in India is 12.5 per cent.
The gold market in India is worth $35 billion, out of which 75 per cent is jewellery and the rest is investment demand, ie, bars, coins and ETF.
“Tax compliance is increasing and is sought to be further increased through a carrot and stick approach. PAN is a short term challenge and presumably just one of the first steps in the whole journey towards better tax compliance across all segments, if indeed tax compliance improves then this will put gold in a better position but if tax compliance objectives remain unmet, this may be a serious drag for organised players,” said Somasundaram PR, Managing Director-India, World Gold Council.
“The grey market is happening as over 90 per cent of the business takes place in an unorganised way. But the ‘unprofessional’ segment could not sustain long,” Joy Alukkas group Chairman, Joy Alukkas told Express.
