Jewellery and related stocks saw a mixed response to the Central Board of Direct Taxes' (CBDT) diktat that customers provide their permanent account number (PAN) compulsorily for high value jewellery purchases.

A CBDT notification requires buyers to quote their PAN whenever they purchase jewellery or bullion worth Rs five lakh or more from July 1 onwards.

While some jewellery stocks such as Thangamayil and Titan lost four and two per cent respectively, some others were either flat like Gitanjali Gems (0.28 per cent gain) or gained like Suashish diamonds (2.77 per cent).

“It's a very good step and is aimed at keeping a tab on black money,” said Mr Rajesh Agarwal, Head of Research Eastern financiers, a Kolkata based brokerage. “Rs 5 lakh is quite a decent sum and when financial instruments attract this KYC then why not for jewellery?”

Experts said the behaviour of the stock market clearly showed that there was no direct correlation between quoting one's PAN for buying jewellery and performance of the stocks in question.

“One can always split up one purchase into two transactions of less than Rs 5 lakh,” said a retail investor who regularly invests in gold.

Added to this is the fact that local jewellers usually sell gold in exchange for cash and rarely accept credit and debit cards. “This results in a win-win situation as cash received is adjusted against old gold inventory and the customer does not have to pay value added tax (VAT),” said the investor.

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