The Lok Sabha earlier this week 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. Dispelling rumours that jewellery would be covered under the amended law, the Central Board of Direct Taxes (CBDT) said the government has not introduced any new provision regarding changeability of tax on jewellery.
Still, there are some questions about the new taxation policy and normal people were seems confused about the law, let us clarify all your question.
Q.1 What is the new Taxation laws?
Ans. The Lok Sabha earlier this week 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.
Q.2 Did we have to pay additional taxes now?
Ans. No, it’s only for those who has hide their income from government, It means if someone has bought gold from his/her undisclosed (without tax) money when caught by Income tax dept. they have to pay 85% tax on it.
Q.3 Did govt. put any limits on buying gold?
Ans. No, govt. didn’t put any limits on buying gold.
Q.4 But, what is 500gm, 250 gm and 100gm limits that everyone talking about?
Ans. During any income tax searches, gold jewellery and ornaments up to 500 grams for married women, 250 gm for unmarried women and 100 grams per male member of the family will be exempt from seizures.
Q.5 What about the ancestor gold that i have in possession?
Ans. 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, Further, legitimate holding of jewellery up to any extent is fully protected.
Q.6 But how government distinguish between ancestral gold and legitimate jewellery?
Ans. It is unclear how the tax authorities plan to distinguish between ancestral and “legitimate” jewellery or what sources of income would be required to explain those holdings.
Q.7 Why Government made such decision?
Ans. The government rooted out anticipation that it might be imposing some kind of restrictions on gold holding by individuals that was hovering around after the reports that many people had converted their black money into gold after the move.
Q.8 But, why?
Ans. As India is the world’s second-biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts, the ministry were reportedly monitoring gold deposits of people after the ambitious demonetisation step.
Hope these answers all your burning questions.
By: Saket Sharma