PAN is Required for Buying Gold Exceeding Rs. 2 Lakh

Without furnishing a Permanent Account Number (PAN), customers will no longer be able to buy gold bars and coins worth more than Rs. 2 lakhs. As PAN is treated as source of identity, it is mandatory on the part of the seller to collect tax at source on such sales.

The recent Finance Bill 2012, which was presented by the Finance Minister, says that, there is no change in the threshold limit for Tax Collected at Source (TCS) on cash purchase of gold bullion and it is retained at Rs. 2 lakh. However, it clarified that Bullion will not include any coin less than 10 grams.

A senior Finance Ministry official said that PAN helps in checking out black money as TCS requires the identity of the person purchasing gold. He clarified that Tax Deducted at Source (TDS) is different from the Tax Collected at Source (TCS) as TDS is the payment made after deducting tax at specified rate while for TCS, the seller has to collect tax at the specified rate from buyers and deposit it with the Government.

The official said that even small jewellery traders or goldsmiths buy gold worth more than Rs. 2 lakh, and it is not only mandatory for traders but for everyone to have PAN for registration for state levies. The official also said that getting PAN doesn’t mean that one will have to pay tax. Income-Tax Act clearly explains that PAN is a tool to establish financial identity. If a person is paying TCS and his income is less than the threshold for tax, he can claim and refund the amount only if he has PAN.

All these measures aim not just to check the details and flow of unaccounted money in the gold trade but also to reduce gold imports. This is because increase in gold import is becoming primary drive for rising current account deficit.

Source: The Hindu