Only purchase of jewellery above Rs 2 lakh needs mandatory KYC

Department of Revenue (DoR) has clarified that any purchase of gold, silver, jewellery or precious gems and stones below Rs 2 lakh does not require PAN or Aadhaar of a customer as mandatory KYC document. 

Sources said that the notification issued under PML Act 2002 on 28 December 2020 is a requirement of under Financial Action Task Force (FATF) for dealers in precious metals and precious stones (DPMS) to carry out KYC and customer due diligence only when they conduct cash transactions above Rs 10 lakh. 

Financial Action Task Force is the global money laundering and terrorist financing overseer which as the inter-governmental body sets international standards aimed to prevent illegal activities on terror funding and money laundering. One of the recommendations requires the DPMS sector to fulfil obligations of customer due diligence (CDD) when they conduct cash transactions above a certain limit (USD/EUR 15,000). India has been a member of FATF since 2010.

Sources said that reports in the media alluding that any purchase, even if below Rs 2 lakh, of gold, silver, jewellery or precious gems and stones in cash require KYC are baseless. 

Sources said that since in India, cash transactions above Rs. 2 lakh is not allowed under section 269ST of Income-tax Act, 1961, dealers not receiving cash more than Rs 2 lakh in compliance with the existing provisions of the Income-tax Act will not be covered under this notification.

Also read: No new KYC disclosure norm for jewellery purchase, only valid for high value cash purchases