Bringing bullion and jewellery transactions under the proposed goods and services tax (GST) will help track black money deals, said a white paper on black money tabled in Parliament on Monday.
“Given the need to catch all transactions, the best bet would be the through the proposed GST Act,” the paper said. “This is an area that needs careful analysis in terms of efficacy and assessment of costs and benefit before the required regulations are enacted.”
The government plans to bring a GST aimed at stitching together a common national market by replacing a welter of levies such as local duties and excise with a single tax.
Cash sales in the gold and jewellery trade are quite common and serve two purposes. The purchase allows the buyer the option of converting black money into gold and bullion, while it gives the trader the option of keeping his unaccounted wealth in the form of stock, not disclosed in the books or valued at less than market price.
“There is also urgent need to improve the reporting and monitoring systems in this sector. A fairly large number of transactions in this sector remain totally unreported and therefore facilitate investment and consumption of black money,” it said.