The NDA government has been trying to bring in more transparency in the jewellery sector. It is well known that gold is a popular investment where black money is parked. Earlier in August 2017 , the government had brought jewellery sector under PMLA (prevention of money laundering act).
According to the rules notified in August 2017, every jewellery store with a turnover of 2 crores would come under the PMLA radar. Every cash sale in excess of Rs. 50,000 had to be reported to the government by these stores. However, the order was reversed in October 2017 to improve easy of doing business. Gold imports had surged after the removal of the original order in August 2017.
What are provisions of PMLA ?
The Prevention of Money Laundering Act 2002 enables the government to confiscated property derived from money laundering and punish the offenders under the act from 3 to 7 years in prison. The act also empowers the government to make rules regarding maintenance of records to monitor transactions in sectors which are potentially prone to money laundering. Maintaining KYC (know your customer) records make black money transactions harder for both the customer and the owner of firms.
Plans to bring back KYC norms in Jewelry sector
The NDA government is planning to bring back the regulation with a higher cash limit for reporting. This time, it might take a more accommodating view on ease of doing business to ensure that the common man is not affected by the rules. It was found that many customers did not have PAN cards in the previous attempt to regulate use of cash in the jewellery sector. Reporting limit for cash transactions might be increased from current Rs. 50,000 limit. Bringing back the KYC reporting norms under PMLA could help in curbing future use of black money in gold purchases.