Gold Jewellery acquired through legitimate/exempted income is Tax-free:
Gold in India is not just looked upon from an investment perspective, but it is also looked upon as a symbol of status of an individual/family. Be it a festival or marriage or any other auspicious occasion, people’s zeal of holding the yellow metal has never deterred. It is because people have been allowed to hold gold jewellery up to any extent without having a need to pay taxes on the asset.
However, after the demonetisation of old Rs. 500 and Rs. 1000 currency notes in the country and the latest amendment in the IT law i.e. with the introduction of the Taxation Laws (Second Amendment) Bill 2016, there has been a lot of speculation and rumours going around in the market regarding the taxation of Gold Jewellery. People have been under the apprehension that the jewellery they possess will also come under the regime of the amended IT law and they have to pay a hefty tax on the gold jewellery they have been holding. There has also been a fear among the people that the taxman will seize their assets.
But, you need not have to worry about such speculations and rumours anymore now, as the government of India has clarified on the taxation and seizing of gold jewellery. Listed below are some of the important points clarified by the government in its notification issued on December 01, 2016:
• There will be no tax levied on the inherited gold jewellery or ornaments bought through the disclosed income.
• The government has clarified that any gold jewellery bought out of the disclosed income or from income exempted from tax such as agricultural income or from any reasonable household savings or which has been inherited legally and have been acquired out of the disclosed sources is neither chargeable to tax under the existing law nor will it be chargeable to tax under the amended tax provision.
• There is no restrictions on holding of gold jewellery or ornaments by anybody provided it has been acquired from legitimate sources of income including inheritance.
• Jewellery and ornaments held up to the extent of 500 grams per married lady, 250 grams per unmarried lady and up to 100 grams per male member of the family are not going to be seized during the search operations, even if prima facie, it does not match with the income record of the assesse.
• Officers who will be conducting the search has the discretion of not to seize the jewellery even of higher quantity based on various factors which include family customs and traditions.
Now, that the government has clarified on the taxation of the gold jewellery, the onus of proving that the gold jewellery has been bought through a legitimate source of income or have been inherited lies completely on you.
Ways to prove that the gold jewellery acquired is inherited
If you have acquired gold jewellery through inheritance from your ancestors, then listed below are some of the ways through which you can prove your point:
• You can prove it through the will of the deceased where it has been mentioned that the gold jewellery you possess has been handed over to you.
• By disclosing the tax receipts of the wealth tax paid by you up to the year 2014-15 as you would have declared the gold passed on to you through generations in your wealth tax returns.
• If your taxable income exceeds Rs. 50 lakhs per annum, then you would have declared the details of the jewellery held by you in your tax returns filed for the fiscal year 2015-16. You can show the copy of the tax returns as a proof.
• If you have insured your jewellery, then you can show the insurance papers as a proof.
• In case you have received the gold jewellery as a gift, you can present the proof of the same.
So, if you are holding gold jewellery or ornaments from a legitimate source of income or from any tax exempted income, you need not have to worry about being scrutinised by the income tax officials. Neither your jewellery be seized nor will it be taxed by the government. You can happily ignore all the speculations going around in the market.