Amended Icome Tax Law not to tax ancestral jewellery, gold

New black money taxation provisions will not cover household jewellery, the FInance Ministry said today.

FinMin allayed apprehension of new tax bill proposing to bring household jewellery to tax. 

Gold Inherited or Bought With Disclosed Income Won't be Taxed

In this regard, the Finance Ministry has also drawn reference to instruction No.1916 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 up to any extent is fully protected, the release added. 

The Finance Ministry has clarified that the Taxation Laws (second amendment) 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.