India revokes its identity check programme for gold purchases over Rs.50,000

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Gold sales are likely to revive during the coming festival of lights, Diwali with the government of India revoking its order that mandated PAN and Aadhaar cards for purchases above Rs 50,000.

In a notification issued on August 23, the government had brought jewellery dealers under the purview of the Prevention of Money Laundering Act 2002 (PMLA) and were told to report on buyers making purchases over Rs 50,000. Therefore, PAN and Aadhaar cards were made mandatory as part of ‘Know your customer (KYC)’ rule.

A decision to revoke the said notification was taken in the GST Council meeting held last week.

Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and is largely celebrated in North and West India.

The order comes as a big relief for both jewellers and consumers, as gold and silver sales were down in last two months, considered a busy season for gold purchases.

More than jewellers, consumers were affected with the notification as they were not comfortable showing PAN and Aadhaar documents. After demonetisation last year, and a visible tightening of Income Tax rules, consumers have been wary of purchasing gold over Rs 50,000 value. The rollback of this order will definitely improve ease of doing business, gold retailers said.

“We are expecting sales to revive after a lull in preceding months. We will be more than happy if sales remain normal during Diwali,” said a jeweller from Mumbai.

Jewellers are expecting a 15 per cent growth from over year-ago period. During last Dhanteras, gold and jewellery sales had risen by up to 25 per cent on higher demand in view of good monsoon and favourable price levels, as per the industry body data.

India is the world’s largest gold consumer and imports a sizeable chunk of its total annual consumption of around  800-900 tonnes.

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