KOCHI: It is time for some 'golden' calculations. Unofficial estimate suggest that Indian households have around 20,000 tonnes of gold under their sleeve, worth Rs 56.2 lakh crore (current market rate). If disclosed, these may raise questions on whether it surpasses the limits for gold possession without tax liability announced by the government—500 gram per married woman, 250 gram per unmarried woman and 100 gram per male in the family.
According to these limits, a family of four with a male and female child (unmarried) can hold 950 gram, worth around Rs 26.7 lakh and no questions will be asked, provided proof of inheritance can be shown.
Experts say that the likely impact of the move is that over-the-counter sales of gold might be stopped, there will more inclination towards alternative gold investment schemes, people will be forced to declare gold assets and with a resulting increase in government revenue. These restrictions may also bring about behavioural changes and economic benefits in the long term. Taking into account impact of other policy changes such as GST, PAN card and tax windows to come clean on past aberrations, the immediate benefit will be the potential to squeeze out unofficial trade and place a premium on greater transparency.
“We believe policy focus will continue on bringing about complete transparency through GST, cashless payments, mandatory hallmarking and GMS aided by lower duties that promotes compliance,” said Somasundaram P R, Managing Director, World Gold Council, India. He added that a declaration on gold held by tax payers with income above a limit is mandatory from last year and this information should be available with tax authorities.
G V Sreedhar, Chairman, All India Gems and Jewellery Trade Federation said that honest tax payers need not panic. “Consumer demand for gold jewellery will improve in mid to long term following the effective implementation of transparent policies. The clarification regarding this from the government will help to overcome confusion,” he pointed out.
Apart from buying gold through traditional channels—coins, jewellery, and bars, the affinity towards gold ETFs, Sovereign Gold Bond schemes, India gold coins and e-gold may also find new life going forward.
“Gold can still be bought with accounted money. But going forward, people should be more cautious about asking for receipts. The organised players will be the most benefited. Post demonetisation, the interest rate on bank deposits will be much lower which will make the yellow metal more attractive as investment,” said B Govindan, Chairman, Bhima Jewellers.
“With government control on gold holdings, only a psychological barrier prevents people from shifting towards paper gold. In the long run, people in the country will invest in e-gold and gold ETFs,” said Financial Analyst and AAA Profit Analytics CEO Sajeesh Krishnan.