How much gold can you purchase with or without Aadhaar, PAN proof?

The decision by the Reserve Bank of India (RBI) to withdraw the circulation of Rs 2,000 notes has reportedly resulted in a surge of individuals rushing to purchase gold using cash, particularly Rs 2,000 notes

FP Trending May 25, 2023 14:34:40 IST
How much gold can you purchase with or without Aadhaar, PAN proof?

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The Central government has implemented stricter regulations over the purchase of gold using cash by including the gems and jewellery sector within the purview of the Prevention of Money Laundering Act (PMLA), 2002. This change was officially notified by the government on 28 December 2020. The jewellery industry has been designated as reporting entities under the Act, which mandates their adherence to Know Your Customer (KYC) norms. This entails the requirement of collecting the PAN or Aadhaar details of purchasers for cash transactions that exceed a specified limit. Additionally, jewellers are obligated to report cash transactions of a value equal to or exceeding Rs 10 lakh to the government.

The decision by the Reserve Bank of India (RBI) to withdraw the circulation of Rs 2,000 notes has reportedly resulted in a surge of individuals rushing to purchase gold using cash, particularly Rs 2,000 notes. In light of this situation, it is important to understand the regulations concerning the purchase of gold without the requirement of presenting an ID proof or PAN card. Additionally, it is important to ascertain whether there are any restrictions on the quantity of gold that can be purchased with cash, even when presenting a PAN card.

Hence, you might be wondering what is the maximum amount of gold that can be purchased in cash without the mandatory requirement of presenting PAN or Aadhaar during the transaction.

Cash transaction limits under income tax rules

Under the income tax laws, there are restrictions on cash transactions that surpass a certain threshold. As per Section 269ST of the Income Tax Act, 1961, any cash transaction exceeding Rs 2 lakh in a single day, whether from one individual or in relation to a specific event or occasion, is prohibited. Hence, if you buy gold jewellery using cash that surpasses Rs 2 lakh within a single day, you would be contravening the income tax provisions. According to Section 271D of the Income Tax Act, the recipient of the cash in such a transaction would be obligated to pay a penalty equal to the amount that was transacted in cash.

PAN/Aadhaar is required to buy gold jewellery of over Rs 2 lakh

Meghna Mishra, partner at Karanjawala & Co. told The Economic Times that the PMLA rules permit individuals to engage in high-value cash transactions if they undergo KYC compliance. If an individual purchases gold jewellery amounting to Rs 2 lakh or more, they are required to provide either PAN or Aadhaar details, even if the payment is made electronically. However, Section 269ST of the Income Tax Act prohibits individuals from engaging in cash transactions exceeding Rs 2 lakh. Therefore, KYC compliance is not necessary if the transaction, whether cash or electronic, is below Rs 2 lakh.

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