The income tax (I-T) department has decided to stringently enforce the tax collection at source (TCS) on such transactions to curb the flow of unaccounted and black money.
Brace up to pay more while purchasing gold, bullion and jewellery in cash.
The income tax (I-T) department has decided to stringently enforce the tax collection at source (TCS) on such transactions to curb the flow of unaccounted and black money.
Also, the taxmen will aggressively be enforcing tax deduction at source (TDS) in property purchases.
TCS is being levied on bullion and jewellery since July 1, 2012, at the rate of 1% on cash purchase of jewellery worth Rs 5 lakh or more and bullion worth Rs 2 lakh or more.
However, its implementation is not widespread as TCS is collected by only 249 jewellers across the country, including the top 37 jewellers in Mumbai, said a report shared at the annual conference of senior income tax officials held in New Delhi.
I-T department sources said the move, if implemented properly, can net Rs 3 lakh crore in additional tax collection from bullion and jewellery market alone.
At present, "tax is being collected at source on sale of bullion and jewellery amounting to just Rs 300 crore at all-India level," according to the report.
If the levy is made stringent, the jewellers who are not collecting the tax will pass on the burden to the buyers, experts said.
TCS is mode of tax payment which is collected over and above the amount agreed upon in case of some commodities. A seller of specified goods is required to collect tax at source from buyer at the prescribed rate. Apart from bullion and jewellery, it is also levied on liquor, forest produce, minerals, scrap, etc.
"Real estate, bullion and jewellery are some of the sectors believed to have large amounts of black money in circulation. The strategy could provide a trail of all bullion and real estate transaction happening in cash," a senior I-T official told dna.
"We are hoping this could discourage cash transactions in both the sectors and increase our tax base," the official said.
According to the tax officials, only 0.01% of the total market turnover is being captured in TCS net which is "extremely low". They said TCS collection on jewellery and bullion is 68% less than the target despite gold imports being record high. Under the I-T department's action plan, it would keep vigil in its various jurisdictions for TCS compliance.
The tax sleuths have also stepped up TDS collection by property buyers (other than agricultural land). As per the provision that came into effect from June 1, 2013, property buyers are required to deduct tax at the rate of 1% on payments to seller when the value of such property is Rs 50 lakh or more. The buyer needs to show TDS payment certificate to the sub-registrar and then only the property will be registered.
However, the sub-registrars do not pay much attention to TDS at the time of registration of the property. Since buying and selling of property is a state subject, the tax collection becomes difficult.
The I-T department has decided to take up the issue with state governments to ensure compliance.
If the tax has not been collected or paid as per the Act the person is liable to pay the tax; he is considered as assessee in default, and finally he is liable to pay simple interest for default in remittance of tax collected at source at the rate of 1% per month or part thereof from the date on which the tax was collectible to the date of payment.
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