New PAN rule hurts sale of luxury goods

NEW DELHI: Mails are flying thick and fast at most luxury stores across the country as harried sales staff face a tough time trying to coax people to part with their permanent account number (PAN) details. By the looks of it, they are not accomplishing much, resulting in poor sales of luxury goods.Furnishing of PAN details has been made mandatory by the government for any transaction above Rs 2 lakh in a bid to weed out black money .However, the move has deterred many wealthy shoppers from spending lakhs of rupees on luxury products such as handbags, watches and writing instruments. “Our bags start at Rs 2 lakh. Sales at our store have been hit badly because our regular customers have stopped coming,“ said a senior executive of a French luxury brand. Earlier, most of them would pay in cash. But now, instead of giving their PAN details, they are opting to shop abroad.“Most people in the luxury industry TOI spoke to complained about similar issues. For instance, at a store selling high fashion French leather goods in the capital, executives are tearing their well-groomed hair out to convince customers to reveal their PAN card number.“We have taken a hit of several lakhs of rupees over the last few days but have not been able to figure out a way around the problem,“ said an executive at the store. The other day, a lady who had come to buy a bag said she wouldn't risk getting her husband into trouble by furnishing his PAN card details. Eventually, she walked out without buying anything.“Nikhil Mehra, CEO of Genesis Group that has marketing and distribution arrangements for several luxury brands such as Jimmy Choo, Giorgio Armani, Em porio Armani and Tumi among others and is the JV partner for Canali, Burberry and Villeroy and Boch in India, said consumer sentiment here has been affected by this ruling. “However, for most of our brands it is not a challenge because prices are within the Rs 2 lakh limit,“ he said.The Indian luxury market has been pegged at Rs 16,300 crore in 2015 by market research firm Euromonitor and is expected to touch Rs 39,000 crore by 2020, with an annual growth rate of 19 per cent.