Got some gold? Get ready to greet the taxman at your door

The Narendra Modi government is mulling a scheme to tap into the hoards of gold lying with the people. Under the scheme, individuals would be asked to declare the quantity of gold they are possessing beyond a limit and pay taxes on the declared assets.

Like the earlier such “amnesty” schemes floated by the Modi government, this scheme too shall be time bound. Meaning that after the window is closed, the hoarders will have to pay hefty fines. The scheme is likely to be announced soon, a report in ‘Money Control’ said.

A threshold for the quantity of gold one can hold will be fixed under the scheme. Once the scheme is closed, heavy fines will be imposed on those holding unaccounted gold beyond the prescribed limit, the report said.

However, gold jewellery of married women upto a certain limit will be exempted.

The new scheme is being considered as yet another attempt to unearth lakhs of crores of “black money” still lying in the system in the form of “unaccounted for” gold.

It would also try to overcome limited success of an earlier amnesty scheme also known as IDS-II launched in 2017 post the demonetisation exercise.

The scheme leaves several questions unanswered. For instance, what would happen to those who have amassed gold over times and on many occasions the yellow metal has been inherited leaving no transactional details. Not all this can be described as “black money”.

Also, there is fear that after declaration of the wealth, an individual may be prone to harassment by tax officials.

It happened during the last two income declaration schemes (IDS) where tax officials were found to be seeking response from people making declarations to explain their source of income. In fact, lakhs of SMSs were sent by tax officials seeking response from cash depositors during the time of demonetisation.

The industry had suggested a new model for gold amnesty scheme to ensure its success as paying up front taxes on the value assets would attract few takers.

It had said that in return for declared gold, the government could issue 10 year zero coupon bonds with yield on it lower than prevailing rates. The gap in yield could take care of the tax that the declarer has not paid on the black money used to buy gold.

(With inputs from IANS)