All gold transactions may soon require PAN
The panel that was set up to look at all aspects of household finance in India has recommended that PAN card should be required for all gold transactions. Previously, it was needed only for transactions over Rs. 2 lakh. Moreover, to avoid gold transactions going underground, the committee suggested that all gold purchases be recorded using an electronic registry such as a depository.
Indian households and their love for gold
According to a report from World Gold Council, an approximated 22,000-23,000 tonnes of gold lies idle in Indian households and organizations (temples, charities etc) in India. The yearly imports total to almost 850-1,000 tonnes which is valued at $35-45 billion.
Policy on gold: PAN compulsory for transaction Rs. 2 lakh
In 2016, the Indian government brought out policies stating that any consumer who purchases gold valued over Rs. 2 lakh would be required to submit his/her PAN details. In 2015, the government had also introduced an excise duty of 1% on non-silver jewellery. A scheme that enabled consumers to convert their gold into a financial instrument that reaped interest was also introduced.
Scrutiny tightens around household gold
The panel further revealed that gold holdings in Indian households are invariably high compared to other parts of the world and this may be due to tax evasion. The panel also suggested that a modification of gold bonds which are currently in operation should be introduced. These RBI bonds, the panel said, should be physically reclaimed and not just reclaimed in cash upon maturity.
Lack luster enthusiasm for gold monetization in the past
The Modi government had floated several gold monetization schemes in 2015, where people could earn interest on their unused gold. However, other than the initial enthusiasm at the time of launch, the schemes didn't percolate to the common man. Indians, it was noticed were not after liquidity of gold and moreover, these bonds exposed them to scrutiny which Indian gold buyers didn't want.
