The recent fall in gold prices to Rs 28,085 as on May 15, 2012 from Rs 29,243 as on May 03, 2012 may have induced you to buy the precious yellow metal - gold. But this time while you plan to buy gold do keep in a reminder to carry your Permanent Account Number (PAN) card along, as you will have to furnish the same to the seller in case the transaction involves buying of gold coins or bars worth Rs 2 lakh or more.
This vigilant step has come in from the Government to keep a check on the menace of black money. Also it is now mandatory on the part of the seller to collect tax at source on such sales. The buyer's identity - the PAN will be treated as the source of identity for this purpose, will be mandatory.
Moreover, as per the norms for tax collected at source, the seller would be required to collect tax at a specified rate (from buyers) and deposit it with the Government. This is different from Tax Deducted at Source (TDS) where payment is made after deducting tax at specified rate.
It is noteworthy that, the Income-Tax Act clearly explains that getting PAN does not mean that one will have to pay tax. It is a tool to establish the financial identity. Similarly, if somebody is paying tax collected at source and his income is less than the threshold for tax, than he can claim refund only if he has PAN. This is the procedure for not just for traders but for any one.
Impact of such an initiative on gold buyers...
There would be no adverse impact on the buyers of gold coins or bars as furnishing PAN card for the purchase of gold, may not be resisted unless transaction is through unaccounted cash (i.e. black money).
However, we think that furnishing PAN card for such purchases will help the seller as well as the Government to keep a track on suspicious transactions in bullion trade. Also, with standard customs duty on gold bars being hiked to 4% from 2%, the Government aims to reduce gold import, and thereby even reduce current account deficit (CAD).