Individuals and others seeking to make large deposits of gold under the recently announced gold monetisation scheme may have a reason to worry. The finance ministry officials told FE that gold purchased using ‘white’ money only can be deposited under the scheme.
The draft scheme released for public comment on Tuesday does not specify a maximum limit (while the minimum is 30 gram) for gold deposits by individuals and institutions, but large deposits above a threshold of monetary value are likely to invite questions on the source of funds.
The finance ministry is clear that the scheme is meant to monetise household gold stocks. Under the scheme, one can deposit gold in a bank account and earn tax-free interest income.
Financial institutions are anyway required to inform the tax department about purchase or sale of goods and shares, investments, expenditure, loans and deposits above R50,000 a year in addition to certain specified transactions above separately notified threshold. These transactions such as cash deposits above R10 lakh, credit card payments above R2 lakh, investments in bonds and debentures above R5 lakh and real estate deals above R30 lakh are used by the taxman to identify assessees who probably require a closer examination of accounts.
“We get information from third party sources, which are used in profiling the assessees and in selection of cases for scrutiny. That would continue,” said a field officer of the tax department.
The official explained that the general position of the tax department about special schemes announced from time to time has been that these should not in any way alter the tax regime beyond whatever is the conscious decision of the Cabinet, in which the department’s views would be part of.
The draft gold monetisation scheme said that another scheme in existence for 16 years offered exemption from wealth tax, income tax and capital gains tax and similar exemptions may be extended to the new one too “after due examination”. The tax department will give its views on this in the next few days.
“Abolition of wealth tax is likely to encourage individuals to disclose the value of gold subject to the earlier R30 lakh wealth tax exemption limit,” said Rajiv Chugh, Tax Partner, EY.