In an effort to prevent money laundering, the government is going to ask retailers to report purchases worth more than INR 6 Lakhs to the Financial Intelligence Unit (FIU). This limit will be imposed particularly for luxury goods and jewelry.
A government official reported that while most countries have fixed the limit for reporting such transactions at USD 10,000, Indian government is conducting discussions to decide the limit at around INR 6 Lakhs. Such reporting will help the government agencies like the Enforcement Directorate to detect cases of money laundering. Besides, the information will be used along with other information to aid the Income Tax department in identifying individuals whose purchases are disproportionate to their source of income.
Various other measures have been taken by the government to curb the money laundering in the country. The National Democratic Alliance has announced decisions like canceling the registration of shell companies that exist only to facilitate such transactions. The government has taken steps to crack down on black money and has strengthened the Benami Transactions Act.
The government has also banned cash transactions worth more than INR 2 Lakhs and also transactions above INR 50,000 cannot be carried out without providing PAN number of the buyer. Earlier, on August 23, 2017, it was notified that gems and jewelry dealers are required to report their transactions. However, since there was no set limit and the dealers complained of inconvenience, the order was withdrawn in October.
Moving on, the Prevention of Money Laundering Act states that the banks and financial institutions are mandated to maintain records of all transactions above INR 10 Lakhs along with cross-border wire transfers above INR 5 Lakhs. In addition, the law requires all purchases and sales of immovable property worth INR 50 Lakhs or more to be flagged.
The Enforcement Directorate revealed that as per a recent study, 48% black money is laundered through legitimate financial channels and hence the fact that it’s a cash transaction doesn’t mean that it doesn’t need any tracking.
