As rumours spread thick and fast in the wake of the lok Sabha passing the Taxation laws (Second Amendment) Bill, 2016 that all gold jewellery, including ancestral jewellery, will be taxed heavily, the Government on Thursday tried to dispel people’s fear saying that no such harsh step is under consideration.
The Government also clarified that the Income Tax will not seize jewellery and ornaments to the extent of 500 grams for married women, 250 grams for unmarried women and 100 gm for male member even if they do not seem to be matching with the income record of the assessee. The Government also said that officer conducting search has no discretion to seize even higher quantity of gold jewellery, based on factors, including family customs and traditions.
However, the statement issued by the Government implied that the I-T officials could now seize gold in the possession of married women if it is more than 500 gm. During the last 24 hours, fear that the Government could seize gold has also seen softening of gold prices.
In statement, the Government said, “It is hereby clarified that the above Bill (Taxation laws (Second Amendment) Bill, 2016) has not introduced any new provision regarding chargeability 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 per cent to 60 per cent plus surcharge of 25 per cent and cess thereon. This section only provides rate of tax to be charged in case of unexplained investment in assets. The chargeability of these assets as income is governed by the provisions of Section 69, 69A & 69B which are part of the Act since 1960s. The Bill does not seek to amend the provisions of these sections.”
It went on to add that tax rate under Section 115BBE was proposed to be increased only for unexplained income as there were reports that the tax evaders were 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,” said the statement.
The statement said that jewellery/gold purchased out of disclosed income or out of exempted income like agricultural income or out of reasonable household savings or legally inherited were 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 grams per married woman, 250 grams per unmarried woman and 100 grams per male member of the family shall be made. Further, legitimate holding of jewellery up to any extent is fully protected,” it further said.