New Delhi: The government on Thursday clarified that new amendments in the Income-Tax law approved by Lok Sabha this week does not seek to tax inherited gold and jewellery and also those which has been purchased through disclosed or agriculture income.
It said that there is no limit on holding of gold jewellery or ornaments by anybody provided it is acquired from explained sources of income including inheritance.
“The bill has not introduced any new provision regarding chargeability of tax on jewellery,” said finance ministry.
It pointed out that during searches by income tax there is an provision since 1994 that jewellery and ornaments to the extent of 500 gms for married lady, 250 gms for unmarried lady and 100 gm for male member will not be seized, even if prima facie, it does not seem to be matching with the income record of the assesse.
It said the officer conducting search has discretion not to seize even higher quantity of gold jewellery based on factors including family customs and traditions.
Lok Sabha on Tuesday passed the Taxation Laws (Second Amendment) Bill, which proposes a steep up to 85 per cent tax and penalty on undisclosed wealth that is discovered by tax authorities during search and seizure.
Finance ministry said that the amended section only provides rate of tax to be charged in case of unexplained investment in assets.
“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,” it said.
It also 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 amended provisions.
