Your gold is safe: Govt

New Delhi: In the wake of Taxation Laws (Second Amendment) Bill, 2016, which has been passed by Lok Sabha and is under consideration with Rajya Sabha, some rumours have been making rounds that all gold jewellery including ancestral jewellery shall be taxed at the rate of 75% plus cess with a further penalty liability of 10% of tax payable, the Union government has clarified through a press release.

It is hereby clarified, the release says, that “the above Bill has not introduced any new provision regarding chargeability (sic) of tax on jewellery. The Bill only seeks to enhance the applicable tax rate under section 115BBE of the Income-tax Act, 1961 (the Act) from existing 30% to 60% plus (a) surcharge of 25% and cess thereon. This section only provides (the) rate of tax to be charged in case of unexplained investment in assets. The chargeability (sic) of these assets as income is governed by the provisions of section 69, 69A & 69B which are part of the Act since (the) 1960s. The Bill does not seek to amend the provisions of these sections. 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 release continues, “… 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. In this connection, a reference to instruction No.1916 is also invited which provides that during the search operations, no seizure of gold jewellery and ornaments to the extent of 500 g per married lady, 250 g per unmarried lady and 100 g per male member of the family shall be made. Further, legitimate holding of jewellery upto (sic) any extent is fully protected.”

The Union government has tried to allay people’s fears by saying that “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”.