Spot gold was flat at $1,490.03 per ounce. - Reuters
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It is unlikely that the government could be planning a ‘surgical strike’ on hoarding of gold by Indian residents. Nor, is a demonetisation-like move or an amnesty scheme likely to be rolled out in the near future.
A member of the Central Board of Direct Taxes, who spoke to BusinessLine on condition of anonymity, pointed out a press release issued by the apex tax body in 2016, which specifies the government position on holding of gold by Indians. According to the member, the circular was issued by the Modi government and it is unlikely that the government will keep changing its stance, which could create uncertainty in the financial markets.
News reports by leading media channels and news portals have suggested that the government could announce a one-time amnesty scheme for declaring ‘unaccounted gold’ and holdings beyond a limit, which cannot be explained, will be taxed at 30-33 per cent. The news has gone viral on social media.
What is the government stance as per the CBDT press release?
An official statement from Meenakshi J Goswami, the then Commissioner, Income Tax (Media and Techinical Policy), and the official CBDT spokesperson, said the position of the Income Tax law with respect to gold jewellery was as follows:
“There is no limit on holding of gold jewellery or ornaments by anybody provided it is acquired from explained sources of income, including inheritance. Vide circular dated 11/5/1994, instructions have been issued in the matter of search and seizure of gold jewellery. Ornaments and jewellery to the extent of 500 gm for a married lady, 250 gm for an unmarried lady and 100 gm for a male member would not be seized, even if prima facie, it does not seem to match the income record of the assessee. The officer conducting the search has the discretion not to seize even higher quantity of gold jewellery based on factors, including family customs and traditions.” The press release was issued by the Ministry of Finance, Department of Revenue.
Indians traditionally buy gold on festivals and family occasions, which is then passed down as inheritance. It is estimated that such gold holdings could be in excess of 20,000 tonnes. Any effort to flush it out or tax it could have a huge impact on the financial markets, experts say......BL