Government plan to dig up your hoarded gold

Government plan to dig up your hoarded gold

Though the rate of tax is yet to be worked out by the government, sources indicated that the thinking is to keep the rate at around 30 per cent with an effective rate of around 33 per cent, including education cess.

FPJ News ServiceUpdated: Thursday, October 31, 2019, 06:13 AM IST
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New Delhi: The government may soon announce gold amnesty scheme under which gold without receipt will have to be disclosed and tax would be payable based on the rate set by the government.

Though the rate of tax is yet to be worked out by the government, sources indicated that the thinking is to keep the rate at around 30 per cent with an effective rate of around 33 per cent, including education cess.

The new scheme – euphemistically described as Demonetisation-II -- is yet another attempt to unearth lakhs of crores of black money still lying in the system in the form of unaccounted gold.

A government approved expert will certify the value of gold. Gold jewellery of married women below a certain amount will be exempted from this scheme.

Indian housewives, according to one estimate, hold 11% of the world’s gold reserves. But more than housewives, the real repositories of gold are temples and trusts, running into thousands of tonnes. The precious metal is offered to the deities. Temples are required by law to deposit such offerings in lockers with public sector banks but that seldom happens.

The government’s Sovereign Bond Scheme allows individuals and Hindu Undivided Families to buy up to four kg of gold in de-mat form. Trusts are allowed to purchase 20 kg of gold.

The scheme bears an annual coupon of 2.5 percent and is redeemed at the market value of gold on maturity. The seventh series of the scheme is to open between December 2 and December 6. The sixth series shut on October 25.

"The idea of the scheme is good but its effective implementation is difficult. People have amassed gold many times over and on many occasions the yellow metal has been inherited leaving no transactional details,’’ said an analyst who did not wish to be named.

Also, there is fear that after declaration of the wealth, an individual may be prone to harassment by tax officials. It is estimated that the total stock of gold held by Indians will be in the region of 20,000 tonne.

However the actual holding after taking into account unaccounted imports and ancestral holdings should actually be in the region of 25,000-30,000 tonne.

The value of this gold at current prices will be in excess of $1 trillion and $1.5 trillion, respectively. The government, it seems, is none the wiser after its hare-brained demonetisation scheme and plans to take more measures to clamp down on black money.

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