The Government scrapped 500 and 1000 rupee notes, around 8 PM on November 8th 2016. Worried citizens with black money, rushed to gold jewelry stores, to buy gold bars and gold ornaments, with their old 500 and 1000 rupee notes. Citizens had only a few hours left to make their gold purchases, with these old notes. Accommodative gold jewelry store owners, kept their shops open, way past midnight.
The gold jeweler (seller), needs to collect PAN details from you, if you make gold purchases more than INR 2 Lakhs. Many jewelers did not bother collecting PAN details, as their esteemed customers bought gold…and more gold…They even backdated the purchase. Gold was bought way above its price, as customers fought with each other, to get rid of old 500 and 1,000 rupee notes. Now the Government is really smart. It is not interested in gold, bought with legally earned disclosed income. The Government is interested only in those citizens, who have loads of black money, converted to gold over the years. But citizens of our country, who hoard black money, are always trying to find loopholes in the laws. How are citizens with black money manipulating the law?
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There will be no seizure of gold jewelry and ornaments up to 500 grams for married lady, 250 grams for unmarried lady and 100 grams for the male member of a family, during an income tax raid. So what happens if you have more gold than this? Can the Government seize your gold, purchased out of undisclosed income….or is there a way out.
Remember: You have bought gold with legally earned disclosed income. You can hold any amount of gold. The tax department will not touch this gold. Ancestral gold and gold bought with exempted income such as agricultural income / gold purchased out of reasonable household savings, do not interest the tax department.
You have inherited gold from your ancestors. How can you prove this gold is inherited gold? Show a will that proves that gold has passed into your possession, from your ancestors. You can even show photographs that indicate your gold jewelry is inherited and not a new buy. There is no definite way you can prove the gold you own, is ancestral gold….but neither can the tax department, prove its not.
Now, if the tax officer catches your gold more than the prescribed limit….you can always say this gold is family gold, as per customs and traditions.
Parents gift their daughters a lot of gold jewelry and ornaments, at the time of marriage. The bride also gets gold jewelry in gifts, from doting relatives and friends. Gifts received by the bride/bridegroom at the time of wedding, are tax free. How will the tax department prove that the gold more than 500 grams, is purchased from undisclosed black money and not gifted during marriage?
Many of our citizens receive gold as gifts from relatives. You can always say the gold was a gift and show proof of it. The gifts you receive from certain specified relatives, is tax free in your hands. How will the taxman prove that the gold was not a gift from specified relatives? Now unscrupulous citizens are using friendly relatives and friends, asking them to hide gold for them. How will the tax department catch all this gold?
Now, chasing black money hidden in gold, is something the tax department has to go after. The Government has no choice but to catch black money hoarders, who use gold to hide black money. But….the Government needs to be real smart in chasing black money, disguised as gold. As greedy citizens innovate….the Government needs to be one step ahead of them. Be Wise, Get Rich.
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