Quashing all apprehensions based on rumours, the government said that jewellery and gold in all its form purchased out of disclosed income or legally inherited from ancestors is not chargeable to tax under the amended I-T law, and there would be no seizure of bullion up to a certain limit even if that does not seem to match income.
"There is no limit on holding of gold jewellery or ornaments by anybody provided it is acquired from explained sources of income including inheritance," the Finance Ministry said in a statement.
As rumours of government crack down on gold holdings raged, the ministry first came out with a statement saying the steeper up to 85 per cent tax in the new Taxation Laws Amendment bill will not apply to legitimate gold holding, including those acquired through inheritance or agricultural income.
However, with apprehensions continuing to persist in the absence of clarity on limit of holding, the ministry came out with another statement hours later saying there is no limit on gold holding from explained sources of income.
Also Read: No provision in new I-T law to tax gold, jewellery purchased out of disclosed income, clarifies govt
The first statement said the taxation laws amendment will not be applied on inherited gold and jewellery as also those items that are purchased through disclosed and agriculture income.
"Jewellery and ornaments to the extent of 500 gms for married lady, 250 gms for unmarried lady and 100 gm for male member will not be seized, even if prima facie, it does not seem to be matching with the income record of the assessee," it said in the second statement.
Legitimate holding of jewellery up to any extent is fully protected, it added.
The government said it has issued directions that officers conducting search have discretion not to seize even higher quantity of gold jewellery based on factors including family customs and traditions.
Dispelling rumours that jewellery would be covered under the amended law, the Central Board of Direct Taxes (CBDT) earlier in the day issued a statement saying the government has not introduced any new provision regarding chargeability of tax on jewellery.
"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 CBDT said.
The Taxation Laws (Second Amendment) Bill, which is currently under consideration of the Rajya Sabha, will amend Section 115BBE of the Income Tax Act to provide for a steep 60 per cent tax and a 25 per cent surcharge on it (total 75 per cent) for black money holders.
Another section inserted provides for an additional 10 per cent penalty on being established that the undeclared wealth is unaccounted or black money, taking the total incidence of levies to 85 per cent.
CBDT said: "Tax rate under section 115BBE is proposed to be increased only for unexplained income as there were reports that the tax evaders are trying to include their undisclosed income in the return of income as business income or income from other sources.
"The provisions of section 115BBE apply mainly in those cases where assets or cash etc. Are sought to be declared as 'unexplained cash or asset' or where it is hidden as unsubstantiated business income, and the Assessing Officer detects it as such."
The Bill also proposes to raise penalty under I-T Act for search and seizure cases by 3-fold to 30 per cent, a move aimed at deterring black money holders, from 10 or 20 per cent currently.
Once the amendments are approved by Parliament, there would be a penalty of 30 per cent of unaccounted income, if admitted and taxes are paid. This would take the total incidence of tax and penalty to 60 per cent.
While proposing to amend Section 271AAB, the government has decided to retain the provision of levying penalty of 60 per cent of income in "any other cases". That would raise the incidence of tax and penalty to 90 per cent.
(With PTI inputs)