All India Gem & Jewellery Federation, DGSTI to meet to discuss PMLA

MUMBAI: The All India Gem & Jewellery Federation (GJF) will meet with the Directorate General of Goods and Services Tax Intelligence (DGSTI) on Friday to discuss prevention of money laundering act (PMLA), 2002 provisions that were extended to the jewellery trade recently.
The meeting comes amid claims by jewellers of gold ornament sales having fallen 30-40% y-o-y this Dushera because of the harsh provisions of PMLA and fears of the trade moving underground to obviate the stern rules.
GJF is requesting for provisions to be brought in line with international standards which stipulate a threshold of $15000, or over Rs 10 lakh in rupees, above which KYC is asked for, said Nitin Khandelwal, chaiman, GJF.

"We are meeting with the DGSTI on the issue of PMLA on October 6," confirmed Khandelwal. "We hope the threshold under PMLA is raised in line with international norm of $15000."

Jewellers claim that strict provisions of PMLA which mandate sales above Rs 50000 be made only against KYC documents like PAN and Aadhaar would drive legitimate trade underground as many customers were wary of providing additional documents over and above PAN on fears of it compromising their privacy.

Furthermore, cash sales above Rs 2 lakh can be done only against PAN under the I-T Act, leaving a money trail through RTGS or NEFT or card payment, which details customer information.

The government through a notification late August extended the provisions of PMLA to the jewellery sector, mandating that sales by jewellers above Rs 50000 should only be made against PAN and Aadhaar. Failure to do so would make the jeweller liable to be prosecuted under the harsh law, which could mean prison sentence for suspected money laundering.

The DGSTI will ensure that the PMLA norms are followed by jewellers.