New Delhi, December 1: The Narendra Modi government on Thursday made a huge announcement saying that the recently Amended Income Tax Act will not apply to tax jewellery/gold purchased out of disclosed income or exempted income or reasonable household savings. The Amended I-T Act will also not apply tax on ancestral jewellery and gold, the ministry said. The statement further said that there will be tax exemption on domestic jewellery kept in house and there will be no seizure of gold jewellery up to 500 gm per married lady, 250 gm per unmarried lady and 100 gm per male in I-T searches.

Almost two weeks after Narendra Modi surprised the nation after demonetisation, the Lok Sabha on November 29 passed the Taxation Laws (2nd Amendment) Bill, 2016 that seeks to tax money deposited in banks post currency ban.

After demonetisation the BJP led NDA government had clarified that it was not considering any proposal to restrict holding of gold by individuals.

There were already rumours surfacing around that the Narendra Modi government may impose some kind of restrictions on gold holdings on individuals, as most of the people were queued up in gold stores to convert their black money in the form of gold.

According to several reports, on November 8 when Narendra Modi made a huge announcement many people converted their black money into gold after old Rs 500 and Rs 1000 was banned as a legal tender.

In last few days there were rumours that there banks lockers would be opened in the presence of revenue officials but recently government denied it.

It is quite noteworthy that India is the world’s second-biggest gold buyer, where most people keep the metal in the form of jewellery. According to a rough estimate one-third of gold demand in India – which is upto 1,000 tonnes – is paid in black money or untaxed funds held in secret by citizens in cash which do not appear in any official accounts.