Government Has Issued New Directives to Impose No Tax on Gold Bought Through Legal Income
Posted on 2nd Dec 2016 00:00:00 in Tax Filing
In the recent flurry of financial reforms, there are many rules and notifications released regarding the taxation. It is critical to understand the implementation of existing tax laws and new amendments introduced recently. Taxation Laws (second amendment) Bill 2016 has been passed in Lok Sabha seeking elevated taxes and penalties on unexplained cash and undisclosed assets.
As a matter of fact, the government has introduced various schemes like IDS to curb black money in the system and stop the parallel economy of illegal money. After demonetizing of Rs. 500 and Rs. 1000 notes, the government is taking proactive actions against any illegal activity in the bank accounts. It was an intelligent move made by the central government to dig out the hidden black money by forcing people to deposit their cash in bank.
Rumors on gold policy are on high with the introduction of the new amendment to the taxation laws. People are worried about their inherited assets or gold brought from their genuine income. Clarifying the situation, Finance Minister has stated that there will be no tax burden on jewelry or gold purchased through legal income, exempted income, or disclosed income. Also, gold or jewelry inherited by legal means will be exempted from any taxation.
However, people who don’t have valid proof or are unable to disclose a viable source of gold jewelry can be exempted as per instruction no. 1916 issued in the year 1994. This rule states that people without any evidence can hold a limited amount of gold or jewelry. Married women can hold ornaments weighing 500 grams, unmarried women can have 250 grams and males can have 100 grams gold individually as per this instruction.
People holding legitimate jewelry or gold are fully protected and there is no limit on such precious metal accumulation. In some online resources and media outlets, it is mentioned that the jewelry acquired through exempted or disclosed sources shall be taxable under this proposed amendment. It is a completely baseless rumor and people should not believe in it.
However, Ministry of Finance has put a lot of responsibility on the assessing officers of income tax department and decision on undisclosed jewelry or gold will depend on their discretion.
They will check the status of the family, practices of community, customs of religion, and other circumstances in the cases where a huge amount of jewelry or ornaments will be discovered. The concerned officer can exclude this massive quantity of jewelry from seizure due to understandable circumstances and background of the family. The report of entire proceedings will be furnished to Director of Income Tax or commissioner for authorizing the search.