No Tax on Ancestral Jewellery - Purchase From Disclosed Income

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.

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