New Delhi, August 27, 2017
A panel of financial regulators has proposed that PAN card requirement for gold transactions from jewellers be extended to all transactions, and not just those above Rs 2 lakh and has supported the daily cash limits against the sale of gold to curb tax evasion.
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.
The committee has also proposed a new variant on the RBI sovereign gold bonds currently in circulation be introduced that can be physically redeemed if households wish, and not just redeemed in cash upon maturity.
[The Times of India]