New Delhi: In a major development, it has been proposed by a panel of financial regulators that the PAN card requirement for gold transaction from jewellers should be extended to all the transaction, and not just above Rs 2 lakh. The panel has also supported the daily cash limits against the sale of gold to check tax evasion.
According to a report in "The Times of India", To prevent PAN requirements driving gold transactions underground, the committee has recommended that all gold transactions be registered using an electronic registry such as a depository.
"The committee also notes that measures in the gold market are unlikely to fully deter tax avoidance motivations for holding the asset. A more incisive use of income tax data may be required to detect tax avoidance, and the committee believes that the enforcement of tax avoidance should be strict," the report of the household finance panel said.
The panel was set up to look at various facets of household finance in India on the recommendations of the subcommittee of the Financial Stability and Development Council meeting last year.
The panel chaired by Tarun Ramadorai, professor of financial economics, Imperial College, London, had representation from all the financial sector regulators, RBI, SEBI, the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA).
The committee has said that gold holdings in India appear to be high compared with other parts of the world, and notes that Indian households can achieve higher rates of return from reallocating some portion of these gold holdings towards financial assets.
"There are multiple reasons that households hold gold. One possibility is that the high rate of gold holdings is evidence of tax avoidance, or the hiding of illicit proceeds, and we propose steps to address this if so."
The panel has recommended a variant of gold bonds currently in operation be introduced, which have default inheritance features. "In particular, variants of these certificates could be structured such that their inheritance is matrilineal unless the woman has no daughters in which case sons can inherit," it said.