As the demonetisation scheme plays out in the country, financial investigation agencies have gathered data that suggests a number of jewellers across India have illicitly converted demonetised notes into gold sales. According to the prima facie evidence, 400 jewellers in India showed a sudden spike in sales. The most glaring of them all was a case of a jeweller selling 201 kilograms of gold in three days. Customs Intelligence has identified the 400 big jewellers from 25 different cities based on the sharp jump in sales. Measures will be taken to penalise such practices.
Effects Of Demonetisation On Gold
- Immediately after PM Modi announced the demonetisation of Rs.500 and Rs.1,000 notes, there was a gold rush that hit the markets as people tried desperately to convert their black money.
- Gold prices jumped to Rs.50,000 for 10 grams in the black market.
- Unscrupulous traders sold off their stock at exorbitant prices.
- Jewellers complained of empty stores as the economy faced a cash crisis.
- Demand was slump even though the wedding season was at its prime.
- Jewellers indulged in dividing purchases into separate bills to avoid PAN requirements.
Measures to be taken by the Government
- Investigation agencies have been tasked with identifying jewellers indulging in illicit conversion of demonetised money.
- A notice has already been served to 400 such jewellers across 25 cities.
- The Income Tax Department will be keeping track of gold transactions.
- The IT department will seek explanations from jewellers if a trend of deliberate splitting of sales is found.
- Unscrupulous foreign exchange operators have been halted following an Enforcement Directorate crackdown.
- Tax on undisclosed income has been set at 30% with an additional 33% surcharge plus 10% penalty.
As clearly seen, stricter PAN card regulations enforced from 1st January 2016 have not deterred people from buying large values of gold in cash. The move to curb black money came as a shock to the nation on 8th November 2016. Though measures have been taken, people still resort to loopholes and roundabout methods to convert their ill-gotten gains. There are various ways of converting black money without being caught by the IT department, but there is always a risk. To avoid harsh punishment, jail terms and fines, the government has given the option to declare undisclosed income and pay the set amount of tax.