No tax on ancestral gold, govt clarifies

Jewellery that is inherited or that bought with declared wealth will not be taxed, the Finance Ministry said in a statement. “Legitimate holding of jewellery up to any extent is fully protected,” it clarified. “There is no limit on holding of gold jewellery or ornaments by anybody provided it is ac

quired from explained sources of income, including inheritance.” Even if the gold does not match one’s known income, “jewellery and ornaments to the extent of 500 gm for married lady, 250 gm for unmarried lady and 100 gm for male member will not be seized,” the government said, producing portions of the 1995 law. Big changes have been proposed in that law to introduce steep taxes and penalty on undisclosed wealth found in raids. The changes were cleared in the Lok Sabha earlier this week amid opposition protests. 

The tougher rules follow a currency ban abruptly announced on November 8 to check tax evasion, a move which took out over 85 per cent of the cash in circulation and left millions desperate for valid note. “The apprehension, that the jewellery which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless,” the government’s statement said.