For people who were impacted with Demonetization of currency in India a new thing to bother is with restrictions made on gold possession. Gold is a precious yellow metal which is given high importance by all women in India. On 1st December 2016 Financial Ministry of India announced decision regarding Income tax on gold jewellery limits applicable in India. News of bringing restrictions to gold from 1/12/2016 is considered to bring more impact on common man than demonetization of currency notes on 11/9/2016.
Most middle class families will have more than specified limits of gold ornaments in their homes than mentioned by Income tax amended rules. Most families give minimum 400 grams to 800 grams of gold to bride on wedding.
If parents of groom possess this gold after marriage what will happen. How can they reveal source, they cannot say it’s dowry as it’s against rules. Whole taxation of gold and putting restrictions on it is complicated with this latest Income Tax amendment rules. This is why government has given this part of deciding gold limits to tax assessors.
There are many things to know about income tax on gold jewelry including it’s limits based on gender, marital status .etc. If gold jewellery or ornaments is held by a person which is purchased using income from sources, inheriting .etc. then it is allowed to be kept. There is provision to conduct income tax raids on all suspected places where gold is kept in higher quantities than allowed limits.
All gold above limits can be taken into custody through raids. There is also provision to give back this gold, if a person is able to reveal source of cash used to purchase it. No need to get panic with this new Income Tax Law amendment which is applicable from 1-12-2016. You have to make sure that you purchase or invest in gold only through cash based on your income which has source.
People who considered buying gold as an investment will have to rethink twice. This decision by Indian government is going to directly impact on jewelry shops and it’s sales in coming months. Experts are predicting a reduction in gold import to India with low demand of gold which is an indirect way of banning gold.
When people realize that keeping gold in lockers or in their custody above allowed limits will attract extra taxes, they will try not to purchase gold. Investments of cash will be made in other items. This way gold demand will decrease in India. For past few days after demonetisation of cash there was less demand for gold and prices of gold was plunging down.
News of Income tax on gold jewellery
If demand of gold goes down in India, it will surely impact universal gold prices. Gold rates in India are going down for past few days and downward movement of it will surely cause advantages and disadvantages in Indian economy.
If a person is found t keep posession of gold in excess of limits and have no source to reveal then taxes, fine will be imposed. Tax rate of 30% plus 60% surcharge plus 25 % cess as per Section 112 in Income Tax Act will be imposed on all such gold found in excess of limits.
Gold Limit after Demonetization – Tamil news
Limit on Gold Possession – Hindi news
Gold Holding per person in India – English News
Limits of Income tax on gold jewellery
Certain limits have been specified by Indian Government on amount of gold that can be kept by each person. For un married females limit of gold possession is 500 grams and for unmarried female this limit is up to 250 grams. In case of male, amount of gold that can be kept in hand is just 100 grams.
Ancestor old jewellery with a male or female can be kept in hand even if it is above limits. Will there be any changes to this rule is not known at present.
Also decision was taken in Taxation Laws (Second Amendment) Bill at Lok Sabha by which up to 85 % tax and penalty on undisclosed wealth will be imposed.
CBDT Tax rate under section 115 BBE will be made to act against unidentified income without sources. Strict action is aimed at black money holders in getting them to reveal their undisclosed investments.