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No Tax on Ancestral Jewellery - Purchase From Disclosed Income

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No Tax on Ancestory Jewellery
November 13, 2018
Taxation system in our country has evolved over the years and continues to evolve ina structured manner over time. From the efforts of the incumbent government to simplify the taxation system to implementation of singular slabs for goods and services, the incurring taxes are variable in nature and more often than not, it is the middle class that emerges as the major segment in its purview. Added to this situation is the inherent problem of undeclared assets and "black" money that flows in the form of singular cash transactions. To prevent this, government has, in the recent past, announced a slew of measures that are directed towards checking the flow of undeclared monetary assets and curbing the corrupt malpractices.

As part of this, penalties and tax up to 85% has been proposed on such assets and a proposed bill, under the consideration of Rajya Sabha, has been duly tabled. Under this bill, it has been proposed that section 115BBE of the Income Tax Act be amended in such a manner that well provide for a steep 60% tax and a 25% surcharge on it for the holders of undeclared assets (i.e. "black" assets). This means a total tax of up to 75%. Additionally, there is another section that provides for a penalty of up to 10% (thereby making the total levied penalty and tax 85%).

However, there were initial concerns regarding the type, nature and amount of assets that fall under this proposed act. For instance, in a large section of Indian families, assets are kept in the form of gold and other jewellery and this includes ancestral jewellery as well. However, CBDT (Central Board of Direct Taxes) has dispelled such speculation and it has been decided that the jewellery/gold purchased out of declared income or out of exempted income (e.g. agricultural income) will not be considered as chargeable, both under the existing provisions as well as under the proposed amendments.

Further, any jewellery/gold that is inherited (i.e. ancestral) and has been acquired under explained/declared sources or even purchased through regular and reasonable household savings is exempt from taxation. This directly implies that legal and legitimate holding of gold up to any extent is protected from the taxation.

The Income Tax department officials conduct raids/search operations to investigate and recover the assets and with this in mind, it has been declared that during such raids/search operations, there will be no seizure of gold ornaments/jewellery to the extent of 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male member of the family.

Coming as a sign of protection for the declared and legitimate gold and jewellery assets of any family, this is a very positive development for your financial strength. Another way in which you can safeguard your financial assets against risks is insurance. HDFC Life offers numerous such insurance plans that seek to protect your financial health with an eye towards the future. For further details regarding these plans, check the mentioned link:

https://www.hdfclife.com/life-insurance-plans.

Related Article:

Calculate Your Income Tax

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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