Finance Ministry is reportedly working on a gold amnesty scheme for people with unaccounted holdings of the precious metal. The move is meant to cut down tax evasion and lower the dependence on imports, a media report said.
A proposition has been sent to Prime Minister Narendra Modi which calls for allowing people with illicit stash of gold to declare their holdings to tax authorities and pay levies and penalties, Bloomberg reported. It is still in an early stage and tax authorities are consulting concerned officers, the report further added. People who declare their gold holdings will have to deposit some of the legalised gold with the government for a few years, people in the know said.
This is not the first attempt government has made to coerce people into declaring their gold holdings. Earlier, the government used to levy wealth tax on jewellery, bullion, utensils of gold, silver, etc. However, it was scrapped in 2016 due to its very low threshold and tax rate, which couldn't even cover the cost of processing the wealth tax.
In Budget 2015-16, the government introduced Gold Monetisation Scheme. The initiative hardly made a dent with banks accumulating only 11.1 tonnes gold as of August 31, 2017, a measly figure as compared to estimated holdings north of 25,000 tonnes.
In 2016, the government got the Taxation Laws (Second Amendment) Bill, 2016 passed in the parliament. The Bill enhanced the applicable tax rate under Section 115BBE of the Income-Tax Act, 1961 (the Act) from existing 30 per cent to 60 per cent plus surcharge of 25 per cent and cess. Unaccounted or unexplained gold could have been taxed under this law with up to 75 per cent tax (60 per cent and 25 per cent surcharge). Gold jewellery up to 500 grams per married woman, 250 grams per unmarried women and 100 grams per male member of the family were exempted from the ambit of the law.
From assessment year 2016-17, immediately after demonetisation, the government made it mandatory for all taxpayers with total annual taxable income of Rs 50 lakh or more to disclose their assets and liabilities with the income tax return, including gold articles and bullion.
Reports of a gold amnesty scheme first surfaced in October 2019, but were refuted by the Income Tax Department.
Gold prices reached an all-time high of Rs 53,297 per 10 gram on Thursday as investors looked for havens amid coronavirus crisis and rising US-China tensions.
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