The government's proposal to make Permanent Account Number (PAN) card mandatory for jewellery purchases above Rs 1 lakh in cash may lead to contraction in the industry and result in job losses in the sector, Titan Company managing director Bhaskar Bhat said. (Watch)
As part of a measure to curb the black money in the country, Finance Minister Arun Jaitley in his first full-year Budget proposed to make PAN card mandatory for cash purchases of jewellery above Rs 1 lakh. Jewellers in the country have been threatening to go on a strike if the proposal is not rolled back.
"The fear is that it will lead to the contraction of the jewellery industry as such, because a large part of the transactions are in cash and there are many reasons for this," said Mr Bhat.
While jewellery purchase penetration is deep in the country, there are only 170 million PAN cards in the country and only 30 million income tax assesses, so expecting everyone who makes a cash purchase of above Rs 1 lakh to give PAN card is impractical, Titan said.
Most of the jewellery buyers in India are women, who mostly save to buy jewellery and saying that they are trying to evade tax is unfair, added Mr Bhat.
This move will lead to employment issues and "if the industry contracts it is not a good thing for the country," he said.
Another reason why the proposed move will contract the industry is that a major part of the jewellery sales are exchanges, where customers exchange their old jewellery, which they get from their parents as a gift, added Mr Bhat.
Although making PAN card mandatory for cash purchases of jewellery above Rs 1 lakh will not affect branded jewellers like Titan, but it will mostly affect small jewellers as cash purchase is as high as 60-70 per cent for them, he said. "We (Titan) are impacted less as most of the transactions are done through credit/debit card and cheque," the company said.
Titan believes that customers who make cash purchases of jewellery above Rs 10 lakh are more likely persons trying to avoid income tax assessors rather than a person who is buying jewelleries worth Rs 1 lakh. "We believe we should fish in deep waters for the shark and whales rather than small fish," said Mr Bhat.
The government should re-think the decision and revise the limit to Rs 10 lakh, Mr Bhat urged.
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