Allaying fears over taxation on ancestral jewellery, government Thursday clarified that amended Income Tax bill, which has been passed by Lok Sabha, has no provisions to tax jewellery inherited by an individual or bought from his disclosed income.
"It is clarified that the jewellery or gold purchased out of disclosed income or out of exempted income like agricultural income or out of reasonable household savings or legally inherited which has been acquired out of explained sources is neither chargeable to tax under the existing provisions nor under the proposed amended provisions," the notification said.
Earlier, there were rumours spreading around that all gold jewellery including ancestral one shall be taxed at 75 percent with an additional penalty of 10 percent.
"The apprehension sought to be created that the jewellery with the household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless," the notification said.
The Lok Sabha on Tuesday passed the Taxation Laws (second) Amendment Bill, providing another chance to people with unaccounted cash to come clean. The bill is now under the consideration of Rajya Sabha.
In a surprise move, government announced demonetization of high value currencies on November 8 in its bid to check flow of black money in the system. As some of the black money makes it way to gold, there were fears over imposing taxation on jewellery.
However, government Thursday clarified that legitimate holding of jewellery upto any extent is fully protected and will not invite any taxation.