On social media this news has gone viral that govt has fixed Gold holding/purchasing limit after the demonetisation as under.
- LIMIT FIXED FOR HOLDING/PURCHASING OF GOLD
- Married Lady :500 Gram
- Unmarried lady :250 Gram
- Man :100 Gram
But whether the above news is correct or not ,True or False ,we have examined the details and truth is as under.
In the wake of Taxation Laws (Second Amendment) Bill, 2016 which has been passed by the Lok Sabha and is under consideration with Rajya Sabha, some rumours have been making rounds that all gold jewellery including ancestral jewellery shall be taxed @75% plus cess with a further penalty liability of 10% of tax payable.
It is hereby clarified that the above Bill has not introduced any new provision regarding chargeability of tax on jewellery. The Bill only seeks to enhance the applicable tax rate under section 115BBE of the Income-tax Act, 1961 (the Act) from existing 30% to 60% plus surcharge of 25% and cess thereon. This section 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. 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 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.
- In this connection, a reference to instruction No.1916 is also invited which provides that during the search operations, no seizure of gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made.
- Further, legitimate holding of jewellery upto any extent is fully protected.
In view of the above, the apprehension sought to be created that the jewellery with the household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless.
So the limit specified in message at social media is regarding the procedure followed at the search and seizure conducted under Income tax act .The procedure followed regarding Inventory of jewellery and ornaments at the Time of search and seizure operations is given here under
Inventory of jewellery and ornaments found in the course of the search and their seizure
The Authorised Officer should contact the control room for sending an approved valuer for the purpose valuing jewellery and ornaments found in the course of the search. It is necessary to record the exact place from where the jewellery and ornaments have been found as this fact may be relevant for establishing ownership subsequently. The inventory of the jewellery is generally prepared by the approved valuer after noting the full description of each item of jewellery, its gross and net weights and value. The exercise of valuation of jewellery should be carried out in the presence of the persons from whose possession the jewellery items were found and the witnesses to the search.
Jewellery, ornaments and other valuable articles or things can be seized only if these represent undisclosed income or property. The Board’s Instruction No. 1916 dated 11.05.1994 lay down the following guidelines for seizure of jewellery:-
- i. In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need be seized.
- ii. In the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms per male member of the family, need not be seized.
- iii. The Authorised Officer may, having regard to the status of the family and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director/Commissioner authorising the search at the time of furnishing the search report.
- iv. In all cases, a detailed inventory of the jewellery and ornaments found must be prepared, to be used for assessment purposes.
Bullion found in the course of the search
Gold or silver bullion and silver and gold coins found in the course of the search should also be got valued by the approved valuer. In the case of bullion, the inventory should clearly mention the markings of such bullion and its gross weight. Where bullion with foreign marking is found, the control room should be contacted for further course of action whether these should be seized or not or whether the information regarding its detection needs to be communicated to any other agency or authority.
Statutory procedure for seizure of bullion, jewellery and other valuable articles or things
The procedure for seizure of bullion, jewellery and other valuable articles or things has been given in Rule 112(10) of the Income-tax Rules, 1962.
- Conclusion : The above news is false
- Govt has not fixed any limit for purchasing/holding of jewellery /gold etc.
- The Limit specified in the message is not for holding/purchasing of jewellery .
- This limit was specified vide Instruction No. 1916 dated 11.05.1994 by CBDT.
- The limit discussed above is standard guidelines to be followed while search and seizure conducted by Income tax department.
- No seizure can be done up to limit specified above whether sources are explained or not.
- So you can hold gold /jewellery up to any extent if you have acquired from disclosed /Exempted Income or out of reasonable household savings or legally inherited
- No change has been made or new circular has been issued regarding holding/purchasing of gold now.