Department of Revenue (DoR) has clarified that any purchaseof gold, silver, jewellery or precious gems and stones below Rs 2 lakh does notrequire PAN or Aadhaar of a customer as a mandatory KYC document.
Sources said that the notification issued under (Preventionof Money Laundering) PML Act, 2002, on December 28, 2020 is a requirement ofFATF Dealers in Precious Metals and Precious Stones (DPMS) to carry out KYC andCustomer Due Diligence only when they conduct cash transactions above Rs 10lakh.
This is a requirement of FATF (Financial Action Task Force)- the global money laundering and terrorist financing overseer which as theinter-governmental body sets international standards aimed to prevent illegalactivities on terror funding and money laundering.
One of the recommendations requires DPMS sector to fulfilobligations of Customer Due Diligence (CDD) when they conduct cash transactionsabove a certain limit (USD/EUR 15,000).
India is a member of FATF since 2010.
DoR sources said the contention that any purchase, even ifbelow Rs 2 lakh, of gold, silver, jewellery or precious gems and stones in cashrequire KYC are baseless.
Sources said that since in India, cash transactions above Rs2 lakh is not allowed under section 269ST of Income-tax Act, 1961, dealers notreceiving cash more than Rs 2 lakh in compliance with the existing provisionsof the Income-tax Act will not be covered under this notification.