Don’t Worry! The Government Will Not Seize Your Gold, If
Confusion is an outcome of misinformation and misinterpretation. When the Government changes its policies every day, for whatever reasons, speculations over the next round of changes boil up. At a time when there is no clarity on what demonetisation might have achieved, the Government moved ‘The Taxation Laws (2nd Amendment) Bill 2016’ in the Lok Sabha. Since it was presented as a money bill, it could pass it quickly without any hindrance by the opposition parties.
This development made many people believe that the Government may soon target gold savings of households and the tax officials would raid people’s houses to seize gold jewellery and holdings in other forms.
Before this grapevine could spread rumours further, it issued a clarification addressing the concerns of the people.
What the law says?
According to CBDT (Central Board Of Direct Taxes) instructions bearing №1916 dated May 11, 1994, the Income tax department cannot seize gold jewellery and ornaments held upto 500 gms by a married lady, 250 gms by a single lady, and 100 gms by a male.
The Government clarified that it has not amended sections of the Income Tax Act dealing with the chargability of tax on jewellery. It has only hiked the tax rates for the unexplained part of the income and assets acquired through such income.
Some more clarifications by the Government
- Gold bought using disclosed income wouldn’t be attached even if it exceeds the limits prescribed by CBDT, without any upper limit.
- Gold acquired through exempt incomes such as agriculture income wouldn’t be disputed.
- Since Indians are the firm believers of physical assets, gold as a part of reasonable household savings would also not be seized. In other words, unless the gold holdings are awkwardly disproportionate to the earning potential of the family, they would stay out of the preview of search and seize operations
- Inherited gold won’t be confiscated either.
The Government is of the view that the recent amendments would help it implement schemes such as ‘The Pradhan Mantri Garib Kalyan Yojana, 2016’. The Government is hopeful that with these modifications the tax administration will get more powers to nab the tax evaders.
However, there are reasons to worry as well
In the past, unreasonable seizures by the tax officials have successfully been challenged in the income tax appellate tribunal. Besides this there is no assurance that tax officials won’t harass genuine tax payers. The corruption in the tax department is an open secret.
The flaw is since no gold acquired through tax-exempt sources of incomes will be questioned, rich farmer-turned- politicians would have an easy way to channelise their black wealth.
Clarification from the Government was the much-needed relief for the common man, but that’s not enough to ensure that the guilty will be penalised.