Gold holds a special place in our hearts, particularly during festive seasons when it symbolizes prosperity and good fortune. Purchasing gold, whether for investment or adornment, is a cherished tradition. However, there are rules and guidelines regarding how much gold you can buy without providing your PAN or Aadhaar card, along with essential details about checking gold purity. In this article, we address frequently asked questions on these topics.
How much gold can you buy without PAN and Aadhaar? In 2020, the government included the gems and jewelry sector under the Prevention of Money Laundering Act (PMLA), making them reporting entities. These entities must adhere to Know Your Customer (KYC) norms, which require PAN or Aadhaar for cash transactions above a certain limit. For gold purchases, furnishing PAN is mandatory for transactions valued at Rs 2 lakh or more. Additionally, cash transactions exceeding Rs 2 lakh in a single day, regardless of the transaction’s nature, are prohibited. Violating this rule can lead to penalties equal to the transaction amount, as per Section 271D of the Income Tax Act. Therefore, for purchases below Rs 2 lakh, no KYC compliance is needed, whether you pay in cash or electronically.
What is the limit for holding gold jewelry and ornaments? Owning gold jewelry or ornaments obtained from legitimate sources of income is unrestricted. A 1994 circular from the Central Board of Direct Taxes (CBDT) specifies the authorized limits for gold possession. Married women can own up to 500 grams, unmarried women up to 250 grams, and men are limited to 100 grams. These limits are applied during search procedures for individuals and their family members.
How to check the purity of gold? Gold purity is a crucial factor when buying gold, as it impacts its value. Gold is typically measured in carats (K), with 24K being the purest form. Hallmarking is a mandatory quality assurance process, introduced in June 2021, marked by a unique alphanumeric code (HUID) on the jewelry. This hallmarking process costs Rs 35 plus GST per piece, regardless of weight. The hallmark consists of the BIS logo, purity/fineness grade, and the HUID.
Alternative methods for checking gold purity include fire assay, X-ray fluorescence, and inductively coupled plasma mass spectrometry (ICP-MS). Fire assay is traditional and used for hallmarking and in mining. X-ray fluorescence is a non-destructive method that analyzes X-ray emissions. ICP-MS is highly precise but expensive, typically used by scientists and mining companies.
A basic test involves marking the gold and applying nitric and hydrochloric acid to check for dissolution, indicating purity. The unique density of gold can also help assess its purity.
Understanding these aspects will help you make informed decisions when buying gold, ensuring both compliance with regulations and the quality of your purchase.
