In the plethora of guidelines being issued under the Demonetisation wave, the Government has now declared the following regarding the Gold deposit that individuals can have:
- All jewellery that has been bought with declared wealth or income will not be taxed
- Ancestral jewellery will also be spared taxation
- Married women have been allowed to possess up to 500g of gold – and not worry about it being seized
- Single women will be allowed 250g and men only up to 100g
- All gold deposits that are over 500g and cannot be explained by known sources of income will attract heavy income tax under the gold monetisation scheme
- The government aims to discourage people from converting black into white money, under the scheme
- For people who have been paying wealth tax, only gold jewellery and ornaments which are more than the declared gross weight will be seized – the ceilings can be adjusted by the tax officers depending on the particular community or status of the family
- The government had of course declared that there would be no relief on the know-your-customer (KYC) guidelines or the other reporting requirements of banks.
- The government is hoping to reduce India’s gold imports with the help of its two schemes launched – the Gold Monetisation scheme and the Sovereign Gold Bond scheme
- Under the Gold Monetisation Scheme, individuals will be able to earn some interest on the god lying in their bank lockers – this would be like a gold savings account which will earn interest for the gold deposited in it.
- Gold can be deposited in any form-bars, coins or jewellery
- The earnings therein would be exempt from capital gains tax, wealth tax or income tax
- No capital gains tax on the earning that would accrue to an individual from the increased return on the gold you have deposited
- By doing all this the government also hopes to convert gold into a productive asset
- Gold holdings in India are estimated at more than 20,000 tonnes but since they are not commercially deployed, India still imports 800-1,000 tonnes of gold a year.
- The second scheme – Sovereign Gold Bond scheme – is formulated to “enable individuals to benefit from the appreciation in gold prices without actually physically holding the gold”, according to RBI.
- The government is offering an opportunity to individuals to buy Gold Bonds which would be taken as collaterals for taking loans.
- These bonds can also be sold or traded on stock exchanges
Amongst other things, the new rules and highlights of the demonetisation drive listed by the RBI as of 1 December are:
- From 3 December, old Rs500 notes are not allowed to be usedfor even purchase of petrol, diesel and gas.
- The RBI on Wednesday announced that it will place cashwithdrawal limits on Jan Dhan accounts also, as a precautionary measure.
- The central bank said that on accounts which are fully compliant of the know your customer (KYC) norms—the monthly withdrawal limit has been set at Rs10,000
- In an effort to curb the hoarding of valid currency notes and increasing its circulation, theRBI in its latest notification allowed the withdrawal of the deposited sum in Rs2, 000 and Rs 500 notes, irrespective of the existing cash withdrawal limits.
- TheRBI has also imposed stiff conditions for withdrawal of up to Rs 2.5 lakh in cash from bank accounts for weddings – now the money can be withdrawn only from the credit balance as on 8 November, the day demonetisation was announced.
- Given the rumours of fraudulent deposits happening in various accounts, the government hasalso warned people against depositing their unaccounted old currency in someone else’s bank account.
- All such transactions – the ‘Benami’ transactions, so to say – would be penalised and incur jail terms for a minimum of seven.