PAN, cash limit and TCS on jewellery purchases: what jewellers must know

The law changed on 1 April 2026

For more than sixty years India’s income tax law was the Income-tax Act, 1961. From 1 April 2026 the Income-tax Act, 2025 has taken its place. The Government’s own note on the new Act says it is effective from 1 April 2026, and it has fewer sections, so most section numbers your CA used to quote have changed.

This matters at the counter because posters, WhatsApp forwards and old software screens still quote the old section numbers. The ideas are mostly the same, but when you talk to your CA or read a notice, use the new numbers. In this guide we quote the 2025 Act as it was published in the Gazette of India on 21 August 2025, with the changes made by the Finance Act, 2026.

One honest note before we start: we could open the Acts in the Gazette, but not the full Income-tax Rules, 2026 from an official site. Where a figure lives only in the Rules, we say so and don’t guess. Your CA should confirm those points for your shop.

The ₹2 lakh cash limit for jewellery shops

Section 186 of the Income-tax Act, 2025 says no person shall receive ₹2,00,000 or more in any of the three ways in the table below, except through an account payee cheque, an account payee bank draft, the electronic clearing system through a bank account, or another electronic mode that the Rules prescribe.

The rule is on the person who receives the money, which is your shop. The customer is not the one who pays the penalty. Under section 451, the penalty on the receiver can be equal to the full amount received in breach of the rule. So a ₹2.5 lakh cash sale can cost your shop ₹2.5 lakh.

Notice the words “or more”. A bill of exactly ₹2,00,000 in cash is already caught. And splitting one sale into two bills does not help: one transaction, one person in one day, and one event or occasion are each counted on their own.

Who is outside the cash limit

Section 186(2) lists only a few exceptions: receipts by the Government, a banking company, a post office savings bank or a co-operative bank; loans, deposits and specified sums that section 185 already covers; and persons or receipts the Central Government notifies. A jewellery shop selling to a customer is not in that list.

Payment by electronic clearing through a bank account, or by an electronic mode the Rules prescribe, is outside the limit. Cash is caught, and so are cheques and drafts that are not account payee. The Act leaves the list of other electronic modes to the Rules, so ask your CA to confirm the modes your shop takes, such as UPI and cards, are on it.

Old gold exchange is a common question. The law speaks of money received; it does not say how an old-gold exchange is counted against the limit. Ask your CA how your shop should treat the cash part of an exchange bill.

PAN on jewellery bills: what the Act says

Section 262(9) of the Act works in two steps. First, every person who enters into a prescribed transaction must quote their PAN, or their Aadhaar number, on the documents for it and authenticate it in the prescribed way. Second, every person who receives such a document must make sure the PAN or Aadhaar is duly quoted and authenticated.

For a sale, the customer gives the PAN and your shop receives it on the bill or form, so the second duty is yours. Section 467 sets a penalty of ₹10,000 for each default: on a person who fails to quote, on a person who gives a number they know is false, and on the receiver who fails to make sure it is quoted.

A customer who has linked Aadhaar to PAN may give the Aadhaar number instead, under section 262(7). A customer who has no PAN but has Aadhaar may also quote Aadhaar.

Which transactions are “prescribed”, and above what amount, is set out in the Income-tax Rules, 2026, not in the Act. We could not open the official text of those Rules while writing this guide, so we are not giving an amount for jewellery here. Ask your CA for the current list, the amount that applies to sale of goods, and the declaration form a customer without PAN must sign.

TCS on jewellery sales in 2026

Tax collected at source (TCS) is now in section 394 of the Income-tax Act, 2025. It is a table of the receipts on which tax must be collected, in most rows by the seller. As printed in the Gazette and changed by the Finance Act, 2026, the table covers: liquor, tendu leaves, timber and forest produce, scrap, coal, lignite and iron ore, overseas remittances, overseas tour packages, and parking lots, toll plazas, mines and quarries. Jewellery and bullion are not named in it.

One row reaches further: a sale above ₹10 lakh of a motor vehicle, or of any other goods notified by the Central Government, carries 1% TCS. We did not find a notification naming jewellery while writing this guide, but notifications can be issued at any time. Ask your CA to confirm whether anything you sell has been notified.

The old TCS on sale of goods, section 206C(1H) of the 1961 Act, stopped on 1 April 2025. The Finance Act, 2025 added a proviso that the sub-section shall not apply from that date. If a supplier or a software screen still adds 0.1% TCS on goods, ask why.

If TCS ever does apply and is not collected, section 449 lets the Assessing Officer impose a penalty equal to the tax not collected.

What to do at the counter

• Count cash per customer, per day and per occasion. Not per bill. A wedding family coming back three times is one occasion.
• Stop below ₹2 lakh in cash. At ₹2 lakh or more, the rest goes by account payee cheque, bank transfer or an electronic mode your CA has confirmed.
• Show each payment mode on the bill. A bill that shows cash, UPI and card separately is your record of how the money came in.
• Take PAN where the Rules ask for it, and check it. Checking is your duty as the receiver, with ₹10,000 at stake per default.
• Keep KYC documents private. A PAN copy is sensitive. Store it with the customer record, not on the counter or in a WhatsApp group.
• Ask your CA once a year. Rules and notifications change. Ten minutes with your CA each April is cheaper than one penalty.

How CaratOS fits in

CaratOS doesn’t decide tax questions for you, but it keeps the records clean. On Billing and old gold you can split one bill across cash, UPI and card, and the bill is finished only when the split adds up, so each mode is on record.

Each customer’s bills, old gold and dues sit in one place on Customers, with their KYC documents kept private on every plan. The money and cash book view shows cash in and cash out for the day. Your CA gets a free read-only login to check the figures.

For GST on the same bill, read GST billing for jewellery shops, and for what a bill should show, the jewellery bill format guide. Plans start at ₹1,199 a month on pricing, or book a demo and bring a real bill from last week.

Questions shop owners ask