The finance ministry is working on an amnesty scheme for people with unaccounted holdings of gold in order to cut down tax evasion and lower the dependence on imports.
"The modalities have not been finalised yet but a proposal for the disclosure of and penalty on undisclosed amount of gold stock has been forwarded to the prime minister's office," a senior government official said.
Something that's being considered is that in order to declare gold holdings, people would have to deposit some of the legalised gold with the government for a few years, the official said.
This is not the first attempt government has made to coerce people into declaring their gold holdings. Earlier, the government used to levy wealth tax on jewellery, bullion, utensils of gold, and silver, among others.
However, it was scrapped in 2016 due to a very low threshold and tax rate, which couldn't even cover the cost of processing the wealth tax.
In Budget 2015-16, the government introduced the Gold Monetisation Scheme. The initiative hardly made a dent with banks accumulating only 11.1 tonnes gold as of August 31, 2017, a measly figure as compared to estimated holdings north of 25,000 tonnes.
The Taxation Laws (Second Amendment) Bill, 2016 passed in the parliament in 2016 enhanced the applicable tax rate from existing 30 percent to 60 percent, plus a surcharge of 25 percent and cess.
Unaccounted or unexplained gold could have been taxed under this law with up to 75 percent tax (60 percent and 25 percent surcharge). Gold jewellery up to 500 grams per married woman, 250 grams per unmarried women and 100 grams per male member of the family were exempted from the ambit of the law.
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