Centre restates limit on gold holding

Married woman can keep 500 gm

The Centre on Thursday clarified that new amendments in the I-T Act approved by the Lok Sabha does not seek to tax inherited gold and jewellery and also those which have been purchased through disclosed or agriculture income.

It said that there is no limit on holding of gold jewellery provided it is acquired from explained sources of income including inheritance. “The Bill has not introduced any new provision regarding chargeability of tax on jewellery,” said finance ministry.

It pointed out that during searches by the income-tax department, there is a provision since 1994 that jewellery and ornaments to the extent of 500 gm for married woman, 250 gm for unmarried woman 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 the officer conducting search has the discretion not to seize even higher quantity of gold jewellery based on factors including family customs and traditions.

The Lok Sabha passed the Taxation Laws (2nd Amendment) Bill, which proposes a steep, up to 85 per cent tax and penalty, on undisclosed wealth that is discovered during searches.

The finance ministry said that the amended section only provides rate of tax to be charged in case of unexplained investment in assets.

The Centre on Thursday clarified that new amendments in the income-tax law does not seek to tax inherited gold and jewellery.

“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,” it said.

The finance ministry 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 apprehension sought to be created that the jewellery with the household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless,” said the ministry.

“No tax will be chargeable if the owner is able to provide a satisfactory explanation. For example, jewellery acquired out of disclosed income or out of exempted income or which is inherited. Legitimately, acquired jewellery will not be taxed and the legal position remains unchanged,” said Deloitte Haskins & Sells partner Sunil D. Shah