Hyderabad + Visakhapatnam · Family-run and mid-size jewellers
Income-tax, GST, BIS and PMLA do not arrive as four annual events. They compound across every bullion purchase, old-gold exchange, counter receipt, HUID movement and closing-stock figure. A filing team can say “all is fine” while never testing the day’s transactions as one connected system.
Cash receipts must be tested under all three limbs of section 269ST. Procurement brings section 194Q and section 40A(3) into the same day’s controls.
₹2 lakh receipt threshold · 100% penalty exposure · ₹10,000 cash-payment test · 0.1% buyer TDS
The retail invoice, job-work bill, old-gold intake and input ledger follow different valuation and credit rules. Treating “3% + 5%” as one shortcut creates reconciliation errors.
3% retail transaction value · 5% jewellery job work · Rule 32(5) margin method
Hallmarking is a product-control system, not an annual certificate. Saleable stock in a mandatory district must pass the HUID rule at the point of sale.
Six-digit HUID · permitted caratages · registered-jeweller controls
The ₹10 lakh cash threshold is not merely a billing alert. It activates customer due diligence, connected-transaction review, recordkeeping and FIU-IND reporting responsibilities.
Principal Officer · CTR · STR · linked-cash aggregation
The jeweller lifecycle
The control trail begins before bullion reaches the vault and ends only when weight, value, tax, cash and HUID movement agree.
Bullion and rough-diamond purchases from resident suppliers enter section 194Q once the buyer’s preceding-FY turnover exceeds ₹10 crore and aggregate current-FY purchases from that seller cross ₹50 lakh; TDS is 0.1% on the excess. A jeweller paying cash is separately tested under section 40A(3), while section 269ST applies to the supplier receiving the cash. s.194Q · s.40A(3) · s.269ST
Old-gold intake must record customer identity, gross and net weight, purity, valuation, settlement mode and whether the article will be resold, altered or melted. Purchased jewellery intended for sale must also pass the applicable BIS hallmarking control. BIS guidance
Test the buyer, day, transaction and occasion before accepting cash. Retail jewellery is taxed at 3% on the total transaction value, whether making charges are separately shown or not; the 5% rate is for eligible jewellery job-work service charged by the job worker—not a second retail-invoice rate. s.269ST · CBIC jewellery FAQ
Only the permitted gold caratages—14K, 18K, 20K, 22K, 23K and 24K—may be hallmarked under the scheme. Since 1 April 2023, saleable hallmarked gold jewellery must carry the BIS mark, purity/fineness and six-digit alphanumeric HUID. A sold-out HUID register is a useful internal control, although BIS says maintaining invoice-level HUID records is not presently mandatory. BIS hallmark FAQ · BIS jeweller FAQ
Five CA service tracks
The engagement is designed around recurring evidence: reconciliations, exception logs, officer review and signed closure—not a year-end list of filings.
Principal Officer and Designated Director governance, customer-risk review, connected-transaction aggregation, CTR preparation and documented STR decisions.
Monthly + event-drivenRetail invoices, job-work credits, old-gold margin cases, supplier credit and e-invoice data are reconciled before filing—not after an annual mismatch appears.
MonthlyPhysical weight, purity, stones, making-stage stock, branch transfers and books are tied together. HUID movement is maintained as a management control even though BIS currently says an invoice-level HUID record is not mandatory.
QuarterlyA one-buyer-one-day dashboard tests all section 269ST limbs, while the exception log captures split invoices, event-linked receipts and cash procurement under section 40A(3).
DailySection 44AB reporting is supported by year-end physical verification, valuation-method review, gross-margin analysis and a documented stock reconciliation.
AnnualThe four statute traps
One day · one buyer
The day’s aggregate is ₹5.7 lakh. Section 269ST(a) is breached even if each invoice and receipt remains below ₹2 lakh. Sections 269ST(b) and (c) separately prevent transaction and occasion splitting. The section 271DA penalty equals the amount received. s.269ST · s.271DA
Old gold · cash outflow
Cash paid for scrap or old gold can be disallowed under section 40A(3) when the payment or daily aggregate to that person exceeds ₹10,000, unless a Rule 6DD exception applies. The ₹35,000 limit is confined to payments for plying, hiring or leasing goods carriages. s.40A(3)
BIS · lift-over stock
BIS states that an old hallmarked article must be re-hallmarked with six-digit HUID before sale in the mandatory regime. The registered jeweller making the sale also carries purity and compensation responsibility. The stock-age field cannot override the point-of-sale requirement. BIS jeweller FAQ
PMLA · linked transactions
If the transactions appear linked, the ₹28.5 lakh monthly series crosses the reporting threshold even though no single receipt is ₹10 lakh. That is a connected-series CTR issue. An STR is additionally filed only where the facts create suspicion; it is not an automatic substitute for the CTR. FIU-IND dealer guidance
Legislative correction
The former 1% TCS on cash sale of goods or services above ₹2 lakh was section 206C(1D), not section 206C(1F). Section 206C(1D) was omitted by the Finance Act 2017 when section 269ST was introduced. Current section 206C(1F) applies to motor vehicles and notified luxury goods exceeding ₹10 lakh; jewellery and bullion are not in the notified list. Accordingly, a cash jewellery sale does not presently attract 1% TCS merely because it exceeds ₹2 lakh—but it can violate section 269ST. Section 206C(1H), the former general seller-side 0.1% TCS, was separately withdrawn from 1 April 2025. Finance Act 2017, section 72 · Income-tax Act, section 206C · Finance Act 2025 memorandum
Working tools
Test the person-per-day, single-transaction and event-or-occasion limbs before cash is accepted.
MONTHLY LINKAGE TESTAggregate linked cash operations and route unusual patterns for Principal Officer review.
Why HRA?
Harun Raaj & Co. is a Chartered Accountants practice in Visakhapatnam, with extended coverage for jewellery businesses in Hyderabad and Visakhapatnam.
The operating context includes Basheerbagh, Punjagutta, Charminar, Kukatpally, Kompally and LB Nagar in Hyderabad, and Jagadamba Junction, MVP Colony, Dwaraka Nagar, Gajuwaka and adjoining Vizag markets.
The scope is built for proprietorships, HUFs and private limited businesses dealing in 22K, 18K and 14K gold, silver, diamonds, pearls and old-gold exchange. PMLA support is kept independent: management retains statutory responsibility, while the CA supports governance design, Principal Officer reporting rhythm, reconciliations and evidence.
Frequently asked questions
If old stock is to be sold where mandatory hallmarking applies, BIS says old hallmarked jewellery without the six-digit HUID must be re-hallmarked before sale. BIS provided a transition period, but its current jeweller guidance does not permit a new sale merely because the item was part of pre-April 2023 stock. Exempt categories under the applicable Quality Control Order must be checked separately.
BIS jeweller FAQ, questions 18 and 23 · Mandatory Hallmarking Orders
No—the split does not create safety. Section 269ST separately tests aggregate receipts from one person in one day, a single transaction, and transactions relating to one event or occasion. A breach attracts a section 271DA penalty equal to the amount received, subject to the statutory defence for good and sufficient reasons.
Income-tax Act, section 269ST · Income-tax Act, section 271DA
S.O. 4713(E) dated 28 December 2020 brought dealers in precious metals and precious stones within the designated-business framework when they engage in cash transactions of ₹10 lakh or more, whether in one operation or linked operations. A jeweller entering that scope should complete FIU-IND onboarding and establish Principal Officer, due-diligence, recordkeeping and reporting controls; the exact gazette scope and later FIU guidance should be applied to the facts.
FIU-IND guidance for precious-metal and precious-stone dealers · FIU-IND PMLA notifications
The threshold cannot be tested invoice-by-invoice alone. Cash transactions that appear linked must be aggregated; a series of individually sub-₹10 lakh transactions within a month crossing the prescribed threshold is reportable as a connected series. An STR is a separate judgment based on suspicion and can apply irrespective of amount.
PMLA Maintenance of Records framework · FIU-IND dealer guidance
For periods when both provisions operated, buyer-side section 194Q prevailed where its conditions were met: preceding-year buyer turnover above ₹10 crore and aggregate purchases from the resident seller above ₹50 lakh, with 0.1% TDS on the excess. Section 206C(1H) was withdrawn from 1 April 2025, so it is not a current competing seller-side levy, although historic-period reconciliations may still require the priority analysis.
The new jewellery is ordinarily taxed on its full transaction value; the customer’s old gold is non-cash consideration and must be valued correctly. Rule 32(5)’s margin method is available only when the dealer buys and resells second-hand goods as such or after minor processing that does not change their nature, and no input tax credit was taken on the purchase. Melting old gold and manufacturing a new article normally does not satisfy that resale-as-such condition. A private customer’s sale of personal old jewellery is not presently subject to general section 9(4) RCM merely because the jeweller is registered.
It may be available within the ₹1.5 crore preceding-year threshold, subject to all section 10 conditions, but eligibility is not the same as suitability. The scheme denies input tax credit and restricts interstate outward supply. It may work where inputs carry little usable credit; it is commonly unattractive where imported stones, taxable services, job work or other input tax are material.
The ₹5.7 lakh daily aggregate breaches section 269ST even though each receipt is below ₹2 lakh, exposing the recipient to a section 271DA penalty equal to the prohibited receipt. ₹5.7 lakh by itself does not automatically cross the PMLA ₹10 lakh CTR threshold; it must be included in the month’s linked-transaction review, and an STR must be considered if the pattern is suspicious.
Recurring engagement
Establish the monthly PMLA rhythm, daily section 269ST controls, quarterly stock audit and annual tax-audit closure as one recurring operating system.
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