The government today clarified that there was no new provision introduced in the amendments to the Income Tax laws regarding chargeability of tax on gold and jewellery.
In a statement issued here, the Finance Ministry said that the amended I-T Act will not apply to tax gold and jewellery purchased out of disclosed income or exempted income or reasonable household savings.
Also, the law will not apply to tax ancestral gold and jewellery, it said.
“The Bill only seeks to enhance the applicable tax rate under section 115BBE of the Income-tax Act, 1961 (the Act) from existing 30% to 60% plus surcharge of 25% and cess thereon. This section only provides rate of tax to be charged in case of unexplained investment in assets,” the statement said.
The clarification came in the wake of reports suggesting that the Taxation Laws (Second Amendment) Bill, 2016, which was passed by the Lok Sabha recently, has provisions that all gold jewellery including ancestral jewellery shall be taxed 75 per cent plus cess with a further penalty liability of 10 per cent.
The ministry further stated that during search operations, no seizure of gold, jewellery will be done by the officials to the extent of 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male.
“It is clarified that the jewellery/gold purchased out of disclosed income or out of exempted income like agricultural income or out of reasonable household savings or legally inherited which has been acquired out of explained sources is neither chargeable to tax under the existing provisions nor under the proposed amended provisions,” the statement read.
There has been no change in the existing laws and rules in this regard. All that the government has done today is reiterated the existing law related to possession of gold and sought to allay concerns among the public following rumours on social media around raids, taxation and seizure of gold or jewellery following amendments to the Income Tax Act.
“In this connection, a reference to instruction No.1916 is also invited which provides that during the search operations, no seizure of gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made. Further, legitimate holding of jewellery upto any extent is fully protected,” it further clarified.
Given below is the guidelines/instruction of the Central Board of Direct Taxes (CBDT), dated May 11, 1994, in the matter of seizure of jewellery:
1. In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized.
2. In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized.
3. The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorising the search all the time of furnishing the search report.
4. In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.