The new money laundering rules notified on August 23 has hit the gems and jewellery sector hard. As per the central government's notification any entity which deals in precious metals, stones or other high-value goods and has a turnover of Rs. 2 crore or more in a financial year will come within the ambit of Prevention of Money Laundering Act, 2002 (PMLA, 2002).
Under the act, the directorate general of Goods and Service tax intelligence has been appointed. The threshold of Rs. 2 crore shall be computed based on the turnover of the previous year as per the notification. The PMLA applies to the gems and jewellery sector after the recent demonetisation move which saw the industry selling precious metal and jewellery at high premium and also accepted old scrapped currency notes during the process.
As part of the new notification, all receipts and payments over Rs. 50000 in cash will have to be KYC compliant. The new rules shall increase compliance for jewellers as well as mandatorily require PAN details that shall be in line with other identity proof details.
The industry is of the view that the threshold limit of Rs. 2 crore is very low and with it several jewelers in the rural areas shall also be covered.