The recent Household Finance committee report by the Dr Tarun Ramadorai submitted to the RBI recommends mandatory PAN submission for gold purchase above Rs 2 lakh.
Considering the cultural preferences for gold as an investment option among Indian households, the report suggested several means to ensure more of the money stocked in gold is redirected to alternate dynamic forms of investment.
The author of the report, Dr Ramadorai - a professor at the Imperial College, London, - recommended that the gold bonds, already being issued by the RBI, must have an additional option of being redeemed not just in cash but also as gold, in an effort to increase its acceptability among traditional investors who prefer asset tangibility.
The committee recommended creating awareness among the holders about the mortgageability of sovereign gold bonds. Another key recommendation is to introduce a variant of the existing gold bonds that will have exclusive matrilineal succession unless a woman leaves behind no female heirs.
Acknowledging gold as a major instrument of tax avoidance, the report recommends the creation of an electronic registry to keep track of gold sale. There might also be limits to the daily cash limits on gold sale and tax incentives on gold bonds.
Despite the scrutiny, the report makes a smart remark that all this and more may still not hinder the tremendous amount of tax evasion facilitated by gold. For this, more incisive use of Income Tax details may be highly advisable, it says.
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