No tax on gold or jewellery bought from disclosed income

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The government on Thursday sought to quell rumours that all gold jewellery, including ancestral jewellery, will now be taxed following the passage of the Taxation Laws (Second Amendment) Bill 2016 in the Lok Sabha. The government clarified that gold or jewellery bought from disclosed income would not be taxed.

“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,” a government statement said.

The government also highlighted instruction no. 1916 issued in the year 1994 that stated that gold jewellery and ornaments amounting to 500 gm per married lady, 250 gm per unmarried lady and 100 gm per male member of a family need not be seized.

“Further, legitimate holding of jewellery up to any extent is fully protected,” the statement said.

However, the instruction highlighted by the Ministry seems to also place a lot of importance on the discretion of the assessing officer.

“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,” the instruction said. “This should be reported to the Director of Income-tax/Commissioner authorising the search at the time of furnishing the search report.”

Source by thehindu….