Scotching rumours that the amendments to the income tax Act recently cleared by the Lok Sabha allow the taxman to confiscate three-fourth of the gold jewellery held by any household during search operations, Central Board of Direct Taxes (CBDT) clarified that there was no question of seizure of jewellery up to the limits put.
However, sources said in case of possession of jewellery beyond these limits, a household might need to explain “the sources on the spot” and “to the satisfaction of the search officer,” although “legitimate holding of such jewellery up to any extent will be fully protected”. The current limit for unseizable jewellery holding — 500 gm for a married woman, 250 gm for each unmarried woman and 100 gm for each male member of a household — will remain.
Although the government is seeking to allay fears about indiscriminate seizure of household gold, it is clear that given the discretionary powers with tax officials, the proposed changes that seek to hike the tax rates for “unexplained investment in assets” could prove troublesome for many, especially those who hold unaccounted wealth in gold.
Holding of gold by households, trusts and other institutions in India is the highest in the world — 22,000 tonnes valued at R63.8 lakh crore at current prices of the metal.
“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.
The Bill, which is currently under consideration of the Rajya Sabha, seeks to amend Section 115BBE of the Act to provide for a steep 60% tax and a 25% surcharge on it (total 75%) for “unexplained investment in assets,” in place of 30% tax at present. “This section (115BBE) 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.” the CBDT said.