NEW DELHI: The finance ministry said on Thursday that there is no limit on holding of gold
jewellery
by anybody provided it is acquired from explained sources of income, including inheritance.
Jewellery up to 500 grams for a married woman, 250 grams for unmarried women and 100 grams for a male member will not be seized, even if, prima facie, it does not seem to match the income record of the assessee, the ministry said. The officer conducting the search has the discretion not to seize
gold
jewellery that exceeds the limit based on certain factors, including family customs and traditions.
The finance ministry issued a clarification on Thursday amid rumours that all gold jewellery, including ancestral jewellery, shall be taxed at 75% plus cess, with a further penalty liability of 10% of tax payable. The rumours started after the Taxation Laws (Second
Amendment
) Bill, 2016 was passed by the Lok Sabha. The bill is currently under the Rajya Sabha’s consideration.
“It is clarified that 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,” the ministry said.
It said that the apprehension sought to be created that jewellery with a household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless. The ministry said the bill has not introduced any new provision regarding tax on jewellery. It only seeks to enhance the applicable tax rate under Section 115BBE of the
Income Tax Act from the existing 30% to 60%, plus surcharge of 25% and cess. This section only provides rate of tax to be charged in case of unexplained investment in assets.
It said that the 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
undisclosed income
as business income or income from other sources in their tax returns.
The provisions of Section 115BBE apply mainly in those cases where assets or cash 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.