PAN must for gold buys exceeding Rs 2 lakh
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Customers will no longer be able to buy gold bars or coins worth more than Rs 2 lakh – even by paying cash – without furnishing an Income-Tax Permanent Account Number (PAN).
That is because it is now mandatory on the part of the seller to collect tax at source on such sales. The buyer's identity – the PAN is treated as the source of identity for this purpose – is mandatory for this.
The Finance Minister, Mr Pranab Mukherjee, while moving the amendments to the Finance Bill 2012, retained the threshold limit for tax collected at source (TCS) on cash purchase of bullion at Rs 2 lakh. However, it was clarified that bullion will not include any coin or other article weighing 10 grams or less.
A senior Finance Ministry official told Business Line, “Such a provision is there to check black money. Accordingly the tax collected at source clause has been added to establish the identity of the person from the income tax regulations' point of view. Here, PAN helps in doing that.”
The tax collected at source norms ask the seller to collect tax at the specified rate from buyers and deposit it with the Government. This is different from Tax Deducted at Source (TDS) where payment is made after deducting tax at specified rate.
Even small jewellery traders or goldsmiths buy bullion worth Rs 2 lakh or more. “If you say that these people will face difficulty, it is not true. These traders are required to have PAN for registration for State levies and for other local regulatory requirements. So, traders doing bullion business without PAN is hard to believe,” the official said.
The Income-Tax Act clearly explains that getting PAN does not mean that one will have to pay tax. It is a tool to establish the financial identity. Similarly, if somebody is paying tax collected at source and his income is less than the threshold for tax, than he can claim refund only if he has PAN. This is the procedure for not just for traders but for any one, the official added.
Though the threshold limit on cash purchase for bullion has been retained as proposed in the Budget, the Finance Minister raised the limit for cash purchase of jewellery to Rs 5 lakh from Rs 2 lakh. Along with these, the Budget also raised the custom duty on gold bars.
All these measures aim not just to check the flow of unaccounted money in the bullion and jewellery trade but also to reduce gold import. Increasing gold import is one of the primary drivers of the rising current account deficit. (The Hindu).
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