Jewellery 10 Aug 2017
In December 2016, the Government of India imposed a penalty for the discovery of undisclosed wealth by Income Tax authorities during seizure and search. This means that while there is no limit on holding inherited jewellery that can be accounted for, you would be penalised if you are found holding gold beyond the allowable limit that you cannot account for.How much is the penalty?
The penalty is calculated as 60% of the value of the gold above the allowable limit, plus a 25% surcharge. So, as a married lady, if you own 750 grams of gold that you cannot account for, you would have to pay a penalty on 250 grams of gold, calculated as (60+25)% of its value.Does all gold need to be accounted for?
There are 3 situations in which you would not need to account for your gold.
First, if you own gold within allowable limits. Gold jewellery and ornaments measuring up to 250 grams per unmarried lady, 500 grams per married lady, and 100 grams per male family member are considered legitimate and cannot be confiscated under any circumstances. It is only beyond this limit that the penalty is applicable
Secondly, gold and jewellery purchased with exempted income such as agricultural income, disclosed income, or reasonable household savings are not chargeable under the existing provisions or any proposed amended provisions in taxation regulations. Thus, such gold does not need to be accounted for.
Thirdly, legally inherited gold and jewellery acquired from explained sources is non-chargeable regarding existing laws and future IT amendments.
So, what are these ‘explained sources’? And how can you prove your gold is legally owned or inherited i.e. acquired from these ‘explained sources’ that can be accounted for?
With Indian citizens owning an estimated over 23,000 tonnes of gold, this first-class asset has to be backed with valid proofs to explain that it is inherited or purchased with legitimate income sources. However, it is important to note there is no single window to prove that the inherited gold jewellery lying with you has been acquired by lawful means.