Today Finance Minister Arun Jaitley has once again shaken the nation by specifying the holding limit of gold jewellery and ornaments by Indian Citizens. Arun Jaitely has made the headline while clarifying the ongoing rumours about the taxation on all gold jewellery and ornaments. Many concerns were raised that under the Proposed Taxation Bill aka Pradhan Mantri Garib Kalyan Yojana 2016, whole gold jewellery and ornaments including ancestral or inherited jewellery shall be taxed at rate of 75% plus cess with an additional penalty of 10% of tax payable but this is not the case. Let us understand the stance of the Government.
First of all, the holding limit of gold jewellery and ornaments mentioned by Finance Minister is not something new or not in the law before, it was just a reiteration of old notification no. 347(E) dated 20th May, 1978 titled ?Guidelines for Seizure of Jewellery and Ornaments in Course of Search? backed by Instruction no 1916 dated 11th May, 1994 in Harakchand N. Jain vs. Asstt. CIT (1998) 61 TTJ (Mum.) 223.
The notification in a succinct states that the person not assessed to the wealth tax can hold gold jewellery and ornaments including inheritance or ancestral, to the extent of 500 gms in case of married woman, 250 gms in case of unmarried woman and 100 gms in case of male, even if the does not matches with the income records of the person. Further, the assessing officer, while conducting search and surveys (RAIDS) under section 132, on discretion may not seize even higher quantity of gold considering the status/living standards of the family, customs and practices of the community in which the family belongs.
The Government today clarified that the no new provision has been incorporated in the proposed tax amendment bill regarding chargeability of tax on gold jewellery and ornaments. The Bill only enhanced the tax rate under section 115BBE from existing 30% to 60% plus surcharge of 25% and cess thereon which is charged on the unexplained investment in cash. The hike in the tax rate is due to the malpractice by tax evaders to include their undisclosed income in the current year?s business income or income from other sources and pay tax according to the applicable slab rate.
Today the Government has repeated the same notification to dispel the rumours that the gold jewellery and ornaments with the household purchased/acquired out of the disclosed/known income or exempted income such as dividend income, agricultural income etc. or out of rational household savings or legally inherited which has been acquired out of the disclosed/explained sources of income cannot be held liable to tax under the current provisions or under the proposed amended taxation provisions. The notification has also provides the relaxation that holding gold jewellery and ornaments to the extent of 500 gms in case of married woman, 250 gms in case of unmarried woman and 100 gms in case of male will not be questioned even if the does not matches with the income records or sources of the person.
Image Courtesy Times of India