if you plan to buy bullion and jewellery worth Rs 2 lakh or more in cash and do not have a PAN card, you need not worry. The Income-Tax Department has a solution for it.
In a population of over 121 crore, only 12.10 crore held PAN cards as on March 31, 2011.
According to a new proposal in Budget 2012-13, “The seller of bullion and jewellery shall collect tax at the rate of one per cent of sale consideration from every buyer of bullion and jewellery if the sale consideration exceeds Rs 2 lakh and the sale is in cash.”
This would be irrespective of whether the buyer is a manufacturer, trader or the purchase is for personal use, it added.
One interpretation of this proposal is that cash transaction of Rs 2 lakh or more will not be possible if the buyer does not have a PAN card. Since it is the responsibility of the seller to collect tax and deposit it with the authority, he is also supposed to submit detailed information about the buyer, including his PAN.
Now, the Income-Tax Department plans to bring out a detailed circular explaining how to carry out a cash deal worth Rs 2 lakh or more even without PAN.
“A person without PAN will be required to approach the assessment officer of a particular ward in the Tax Department with Form 13. This form will require details about his income during the last three years.”
The Department, if satisfied, will issue a Nil Deduction Certificate. The whole process is likely to be completed within 15 days, after which the person can take this certificate to the jeweller, and tax will not be collected there, the official added. The official clarified that apart from cheques, tax will not be collected if payment is made through credit cards. The new mechanism will not cover schemes like ‘Pay just 10-11 EMIs and buy jewellery worth 12 EMIs,' which will be treated as sales incentives.
The new mechanism has been designed mainly to curb black money, which is why the limit has been kept at Rs 2 lakh.
“Most of the black money is routed through gold bars. A normal bar weighs 100 gram or more, and as per the current trend, its price could be Rs 2.70-2.8 lakh. This justifies the limit,” he added.
No roll-back of import duty
Despite hectic lobbying and the country-wide strike by bullion traders, the Finance Minister, Mr Pranab Mukherjee, has ruled out rolling back import duty hike on standard gold bars and platinum bars.
However, he was open to considering a compromise formulae regarding excise duty on unbranded gold jewellery and requirement of PAN for buying bullion and jewellery worth Rs 2 lakh and more on cash. He said he would also examine whether levying of import and excise duties could be postponed till finalisation of a compromise formula.
Meanwhile, a highly placed source said that under the compromise formula, excise duty on unbranded gold jewellery could be only on 25 per cent of the transaction value against the proposed 30 per cent.
Similarly, small-scale exemption could be raised from the proposed Rs 4 crore to Rs 6 crore turnover in the previous year. If this happens, no excise duty will need to be paid.