An Income Tax amendment bill was introduced in the Parliament through which the government is looking to eliminate the shortcomings in the existing income tax act which has been misused by those hoarding black money. Demonetization has wiped out black money from the system massively and Income tax amendment is the next step in this regard.
Amendments Proposed In The Income Tax Act
India is the world’s second biggest gold buyer and is estimated that around one-third of the annual demand is approximately 1,000 tonnes. A large amount to buy the gold is paid in black money and those unaccounted cash is held by the citizens which is not registered in any official accounts. There have been reports that the government is keenly watching the gold purchase across the country after the demonetization was announced. But, the government has finally announced that there will be no tax levied on the gold purchased out of disclosed or exempted income.
However, there have been some sort of unwarranted fear amongst the public who are expecting some sort of tax on Gold. Here are the amendments proposed in the Income Tax act by the government.
- The Government has proposed 60% tax, 25% surcharge and 3% cess on the undisclosed income, cash and investment with effect from April 1 2016.
- The amendment has further proposed further increase in the applicable tax showed in the return from current 30% to 60%
- Under section 271AAC, the government has proposed to increase applicable tax rate on unaccountable cash in the return from current 30% to 60%.
- Similarly, penalty for search and seizure has been hiked from 10% and 20% to 30% even if the assess accepts and discloses it in the Income Tax return.
- Under pradhan Mantri Garib Kalyan Yojna, other than 50% of income being charged as tax, penalty and surcharge, 25% of the disclosed income should be deposited compulsorily in interest-free deposit scheme for four years.
- There is no change in the penalty of 200% for misreporting income tax under section 270A.
- Provision 115BBE has been is applied mainly in the cases where assets or cash are declared as ‘unexplained cash or asset’ or where it is concealed as unsubstantiated business income, and the Assessing officer detects it as such .
- One of the biggest doubt about tax on gold has been clearly stated in the amendment stating that there is no limit imposed on the legitimate holding of gold and jewellery, including the inheritance.
- Further it has been clearly mentioned that during the search operations taken by I-T Department, there would not be any seizure of gold Jewellery and ornaments up to the limit of 500 grams per married women, 250 grams for unmarried lady and 100 gram for male member even if it does not match with the income record of the assessee (prima facie)
The amendment also states that individual who has the taxable income over Rs 50 lakh should have disclosed the the details of the jewellery held as on March 31 2016 under assets and liabilities schedule of the tax return. Till the financial year 2014-2015, jewellery was considered as taxable wealth. There is no need to be concerned if an individual has complied with all the regulations.