Finance Ministry has clarified that the Taxation Laws (Second Amendment) Bill, 2016 does not contain any new provision regarding chargeability of tax on jewellery. The Bill only seeks to enhance the applicable tax rate from existing 30 per cent to 60 per cent plus surcharge of 25 per cent and cess thereon.
The Ministry said, there are some rumours that all gold jewellery including ancestral jewellery shall be taxed at 75 per cent plus cess with a further penalty liability of 10 per cent of tax payable. The Bill has been passed by the Lok Sabha and is under consideration with Rajya Sabha.
The Ministry also clarified that the jewellery purchased out of disclosed income or out of exempted income like agricultural income or out of reasonable household savings or legally inherited is neither chargeable to tax under the existing provisions nor under the proposed amendments.
It also referred to an instruction which provides that during the search operations, no seizure of gold jewellery and ornaments upto 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made. Further, legitimate holding of jewellery upto any extent is fully protected.