Rumours that the government will come after your gold after demonetization were put to rest by the Ministry of Finance (MoF) on Thursday.
The MoF said that jewellery up to 500 gm per married lady, 250 gm per unmarried lady and 100 gm per male member of the family will not be seized in the event of an income-tax (I-T) raid.
This is not a new diktat and a note to this effect was first issued in September 2015. As per Section 132 of the I-T Act, the above-mentioned quantum of gold or jewellery cannot be seized during a search operation. If it is a survey, the I-T team cannot take away any valuables.
Also, the ceiling of 500 gm, 250 gm and 100 gm, respectively, can be raised at the discretion of the assessing officer.
In a statement, Meenakshi J Goswami, I-T Commissioner and Spokesperson of the Central Board of Direct Taxes (CBDT), clarified that jewellery bought from disclosed income will not be taxed under existing or proposed amended provisions.
"In this connection, a reference to instruction No. 1916 is also invited, 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. Further, legitimate holding of jewellery up to any extent is fully protected," the statement said.
"In view of the above, the apprehension sought to be created that 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," she said.
Social media, primarily Twitter, went into an overdrive with people commenting and making light of the clarification. An individual said that if caught with over 100 gm of gold, one will have to prove that h/she is a female.
Some were concerned about the possibility that iconic music director Bappi Lahiri will be in for trouble. Lahiri is known for his penchant towards gold jewellery, a permanent part of his attire.
There have been rumours that gold jewellery, including ancestral jewellery, shall be taxed at 75 per cent, with a further penalty liability of 10 per cent of tax payable.
This led to the government issuing another clarification. "Jewellery and ornaments to the extent of 500 gm for married lady, 250 gm 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."
Goswami said that Taxation Laws (Second Amendment) Bill, 2016, only seeks to enhance the applicable tax rate under Section 115BBE of the I-T Act, 1961, from the existing 30 per cent to 60 per cent-plus surcharge of 25 per cent and cess thereon.
Tax rate under Section 115BBE is proposed to be increased only for unexplained income as there were reports that tax-evaders were trying to include their undisclosed income as business income or income from other sources, she said.
