Tax on Cash Purcahse of Gold Coins
Very often unaccounted money in the form of cash chases the precious yellow metal and finds refuge. The recent sharp descending move in gold , as many of you may be aware may have encouraged many to binge into such transactions while buying gold. But now with a clarification issued to the changes made to the Finance Bill 2013, the Government intends to bring such cash transactions under the tax net, by enforcing a Tax Collection at Source (TCS) on sale of jewellery as well as bullion in cash, with effect from June 01, 2013.
It is noteworthy that as per the existing provisions, coins or any other articles weighing 10 grams or less are excluded. But now with effect from June 01, 2013, sale of bullion (viz. coins or any other articles) in cash in excess of Rs 2 lakh shall be subject to TCS at the rate of 1.0%. Likewise on sale of jewellery in cash in excess of Rs 5 lakh would be subject to 1.0% TCS. At present the Bill has been moved by the Lok Sabha, and now will go the upper house of the Parliament - the Rajya Sabha for approval before being signed by the President into law.
We are of the view that the aforesaid proposal in the Finance Act 2013 has brought to put a vigil on unaccounted money put into gold, with India's insatiable appetite and flair to own the same, for both emotional and financial reasons. The withdrawal of exclusion for gold coins or other articles weighing 10 grams or less would bring more people under the tax net as many have preferred to invest in gold via coins or any other articles. It should be noted that this not a new levy, but a modification to the existing tax provision. The unaccounted money also goes into real estate dealings, and hence the Government should keep a vigil on such transactions and impose a levy which can in turn add-up to the kitty of the exchequer.
Best Regards
Prakash Nair
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