Govt says existing IT Act regulations for gold holdings will apply to the gold monetization scheme as well
New Delhi: After Prime Minister Narendra Modi’s surgical strike on Demonetization on 500 and 1000 notes, wild buzzes have been spread on social media uttering the government’s next move is to seize lockers. Banks, which normally operate about 100 lockers regularly, faced a huge rush as they had to open 3,000 lockers for customers who keep their treasures, including gold and cash, in them.
Many states that cash constitutes only a small fraction of the total stock (and flows) of black money. The bulk of black money is in real estate and gold. The flaw in this argument is every illegal real estate deal has a cash component. But the large portion of the black money is saved in the form of gold.
Government states existing tax regulations for gold holdings will apply to the gold monetization scheme as well. Let’s check out how much gold a person can possess as per the latest amendments in Income tax Act, 1995. If the recent dip in prices has made gold an attractive purchase to take back home, here are some rules you must remember before converting your black money to white with demonetization effect.
As per IT Act, those who have been paying wealth tax, only, gold jewelry and ornaments found in excess of the gross weight acknowledged in the wealth-tax return will be seized. Gold deposits over 500gm, which are not explained by known source of income, will attract income tax under the gold monetization scheme
Banks will not be allowed to use the gold deposits to meet their legal liquidity ratio and cash reserve ratio requirements as proposed by the earlier draft.
“Depositors may be intimated by the banks that as per CBDT (Central Board of Direct Taxes) instructions…in the course of Income Tax search u/s 132, gold jeweler to the extent of 500 grams for married women, 250 grams for unmarried lady and 100 grams for male member of the family need not be seized by tax officials, but the tax penalties, as appropriate, will be levied,” the guidelines stated.
In its place of possessing gold in hand, you can also have gold bonds. The gold bond scheme is planned to enable individuals to benefit from the gratefulness in gold prices without actually materially holding the gold. Gold holdings are predicted at more than 20,000 tons but since they are rarely commercially deployed, India still imports 800-1,000 tons of gold a year.