Amendments to the I-T laws do not seek to tax inherited gold and jewellery as also those items that are purchased through disclosed or agriculture income, the government said on Thursday.
The Lok Sabha earlier this week passed the Taxation Laws (Second Amendment) Bill, which proposes steep tax and penalty of up to 85 per cent on undisclosed wealth discovered by tax authorities during search and seizure.
Dispelling rumours that jewellery would be covered under the amended law, the Central Board of Direct Taxes (CBDT) said the government had not introduced any new provision regarding chargeability of tax on jewellery.
"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 CBDT said.
During search operations conducted by I-T Department, there would be no seizure of gold jewellery and ornaments to the extent of 500 gm per married woman, 250 gm per unmarried woman, and 100 gm per male member of the family, it said.
"Further, legitimate holding of jewellery of up to any extent is fully protected," it added.
The Bill, which is currently under consideration of the Rajya Sabha, will amend Section 115BBE of the Income Tax Act to provide for a steep 60 per cent tax and a 25 per cent surcharge on it (total 75 per cent) for black money holders.
Another section inserted provides for an additional 10 per cent penalty on being established that the undeclared wealth is unaccounted or black money, taking the total incidence of levies to 85 per cent.
CBDT said: "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.
Here are three important things that you need to know about the amendment Bill in the context of gold and ornaments:
1. In case of disclosed sources
There is no limit on holding of gold jewellery or ornaments by anybody, provided it is acquired from explained sources of income, including inheritance, agricultural income and reasonable household savings.
2. In case of undisclosed sources
During 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, even if prima facie, it does not seem to be matching with the income record of the assessee.
3. Other proposal
During search and seizure operations, in case of undisclosed wealth (black money), the government has proposed a steep tax and penalty of up to 85 per cent.