Government clarifies exemption limits for gold seizure (Second Lead)
"No limit on holding of gold jewellery or ornaments by anybody, provided it is acquired from explained sources of income including inheritance," the government also clarified.
The government said rumours that all gold jewellery, including ancestral one, will be taxed at 75 per cent plus cess, with a further penal liability of 10 per cent of tax payable, were totally "unfounded and baseless".
"A reference to instruction No. 1916... which provides that during search operations, no seizure of gold jewellery and ornaments to the extent of 500 gm per married lady, 250 gm per unmarried lady and 100 gm per male member of the family shall be made," a Finance Ministry release said here.
"Further, legitimate holding of jewellery up to any extent is fully protected," it said.
In a subsequent clarification, the government included `inheritance` as category among explained sources of income used for purchase of gold jewellery.
The earlier release only spoke of "tax rate to be charged in case of unexplained investment in assets".
The government clarified after apprehensions arose over amendments to relevant law through the Taxation Laws (Second Amendment) Bill, 2016, passed by the Lok Sabha on November 29 to deal with the situation arising out of the November 8 demonetisation.
The Taxation Laws (Second Amendment) Bill, proposes up to 85 per cent tax and penalty on undisclosed wealth unearthed by tax authorities during search and seizures.
"It is clarified that the bill has not introduced any new provision regarding chargeability of tax on jewellery. The bill only seeks to enhance applicable tax rate to be charged in case of unexplained investment in assets," the statement said.
The bill, currently under consideration of the Rajya Sabha, seeks to amend Section 115BBE of the Income Tax Act to provide for 60 per cent tax and a 15 per cent surcharge on it for black money holders.
Another Section provides for additional 10 per cent penalty if established that undeclared wealth is unaccounted or black money.
"Tax rate under Section 115BBE is proposed to be increased only for unexplained income as there were reports that tax evaders are trying to include their undisclosed income in the return of income as business income or income from other sources," the ministry said.
"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 added.
The government said an officer conducting searches has the discretion not to seize even higher quantity of gold than personal jewellery exempted, "based on (other) factors, including family customs and traditions".
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