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No specific provision in the Taxation Laws Bill to cover household jewellery: CBDT

02 Dec 2016 Evaluate

Allaying fears over the proposed amendments to the Income-Tax Act regarding gold holding, the Finance Ministry through an official release has clarified that the Centre has not introduced any specific provision in the recently introduced Taxation Laws Bill to cover “household jewellery”. The government said that amendments to income tax laws do not seek to tax inherited gold, jewellery and items that are purchased through disclosed income. It added that fears over jewellery with households acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is “totally unfounded and baseless” and there will be no seizure of gold jewellery and ornaments to the extent of existing guidelines during search operations.

The Central Board of Direct Taxes (CBDT), the apex direct taxes body, said in a statement that the proposed amendments do not seek to tax inherited gold and jewellery as also those items that are purchased through disclosed or agriculture income. CBDT clarified that no new provision had been introduced regarding chargeability of tax on jewellery.

Following the decision to withdraw Rs 500 and Rs 1,000 banknotes, the government introduced the Taxation Laws (Second Amendment) Bill, 2016 , seeking to impose up to 85 per cent tax and penalty on undisclosed wealth that is discovered by tax authorities during search and seizure, raising rumors that gold jewellery could be covered under the amended law. The bill which received Lok Sabha approval is currently under consideration of the Rajya Sabha, proposes to amend Section 115BBE of the Income-Tax Act to provide for 60 per cent tax and a 25 per cent surcharge on it. CBDT has said that 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.

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