Amount of gold that can be kept in custody of each person has been mentioned as per a new rule that came out from Finance Ministry on Thursday, 1-12-2016. Married women can keep up to 62.5 pavan or 500 grams of gold. Unmarried women can keep 31.25 pavan or 250 grams of gold. Men are allowed to keep 12 pavan or 96 grams. After demonetization of Indian currency happened on 8-11-2016 on directions of Narendra Modi, there was a huge rush to buy gold. There are reports that gold jewellery shops opened till night 11.30 on day of banning Rs.500, Rs.1000 notes.
All black money that was hidden in houses, offices were used by people to buy gold ornaments or gold coins. This was done by them in hope that they could convert it back into cash in future. Gold was one trusted way to deposit cash like real estate, fixed deposits .etc. Specialty of gold till now was that there is no need to pay taxes for keeping it in one’s own custody or at lockers. Gold can be easily converted to liquid cash by selling it at jewelries and is one easy way to keep black money hidden from being noticed. Is it possible that an upcoming India gold import ban may happen in coming days as continuation of demonetization. Money which has no source which is received from bribes, crimes, real estate transactions showing low rates in legal papers, scams .etc. are hidden in form of currency in higher denominations, gold or real estate. By demonetizing higher value currencies of 500, 1000 all such cash became of paper value. Black money holders had no way of converting it by depositing it in bank accounts. Still Crores of money have been exchanged by depositing in binami accounts.
Central Government, RBI and Income tax is after such huge deposits made in bank accounts from savings to current accounts.
Co operative banks which are said to have Lakhs of Crores cash deposited is being investigated at present by RBI, Income Tax. Co operative banks are not given new currencies and are also not allowed to exchange currencies or issue payments of deposits. It’s because Co operative banks are not functioning as per guidelines of Reserve Bank of India.
Few months back Indian Prime Minister Narendra Modi introduced and promoted a gold deposit scheme through which cash can be legally invested in gold. Gold Monetisation Scheme (GMS) is a way by which physical gold can be invested in banks or gold can be purchased by giving cash. Interest will be given for these gold deposits. Sovereign Gold Bond scheme was another way through which paper gold can be bought. There is no physical purchase of gold. Narendra Modi requested everyone to make deposits in paper gold, where by importing of gold to India can be reduced.
Narendra Modi also said that India is a country which has lot of gold and there is no reason why India should remain poor when considered of it’s economical status. Through these scheme Indian Prime Minister tried to being out stored gold and be deposited in banks to increase economic power of our country. At present more than 1000 tonnes of gold of value of 3 lakh crores is being imported into India and most of these are converted in gold ornaments or kept as physical assets.
This trend does not help in economic development of country and crores of money is spent on importing gold from other countries. India is second largest importer of gold and controlling this activity seems to be necessary as crores of tonnes of gold is already in India.
So after currency demonetization there are assumptions that Central Government’s next move will be towards gold. It’s mainly because black money is used for purchasing gold from jewelry shops. Thorough this way crores of tax is lost to Government and noting PAN number in all gold buying transactions has been made compulsory after demonetization of currency.
Indian Bullion and Jewellers Association (IBJA) informed it’s 2500 members that there are chances that Central Government may put limits in form of India gold import ban incoming days. There is possibility that this may become reality soon through this information received from IBJA.
There are reports that around 600 jewelry shops are send notices by IT department regarding illegal sales of gold against black money in form of demonetized currency. There were incidents where some jewelry shops open till midnight and gold was sold at higher premium rates by accepting black money.
If these jewelry shops are found to have done crime their licenses will be cancelled and investigation done to find details of persons who bought gold. All India Gems and Jewellery Trade Federation said that these are just rumors.
So there is a question hanging over everyone and cause sleepless nights to black money holders in India. Will India Ban gold import and fight against hidden black money in form of Gold, is now biggest question. If it decides to do such a thing, what will be procedures.
There are lot of people who buy and keep gold as a form of investment. They plan to sell it or pledge it in financial institutions if an urgent need arises. Traditional Family gold in form of antique jewellery that a person has got from ancestors is another form of gold. Another major type of buyers is woman who purchase gold ornaments for wearing it as fashion or as a status symbol.
Gold ornaments play a major part in dowry in weddings. Even if dowry is illegal in India, giving gold to bride is common as every one knows. Will import banning of gold lead to stopping of dowry in India or increase gold rates causing more burden ?
Gold rates in India were continuing same for past many days of demonetization of currency. Now recently gold rates have started going down slightly. There are possibilities that Indian gold rates will go down further as value of dollar against rupees increase. Demand for gold ornaments have gone down after demonetization, because black money which played a key role in buying gold is now not possible at least for a few months.
It’s expected that around 22000 tonnes of gold is in households in India. Through gold deposit scheme announced by Narendra Modi, physical gold deposits was not high as expected. Earlier in case of black money also Income tax has allowed time to reveal black money and declare it. Those people who did not revel black money has now lost it. Will this same case happen to gold also.
If such a ban on gold import happens in India, there are chances that there will be limits on buying and selling of gold. Also all persons will have to reveal gold in their possession. Only gold that is revealed by a person can be sold or exchanged for cash. This way gold limits will happen i future as a way to unearth hidden black money in form of gold.