New Delhi: An amnesty scheme for gold to bring hordes of black money used in buying the yellow metal could soon be announced by the Modi government.
The new amnesty scheme is likely to allow gold hoarders to come clean on any gold purchase made using black money, by simply declaring it and paying tax on it.
After the demonetisation -- which aimed at arresting black money menace-- this scheme is being considered as yet another attempt by Narendra Modi government to unearth crores of black money blocked in the system in the form of unaccounted gold.
The tax will have to be paid on entire value of gold purchased without any reciept, according to a news report by IANS.
Inside sources indicated that the tax rate is likely to be kept at around 30% -- which comes out to 33% effectively if one factors in the education cess. However, the government is still in the process of fixing the tax rate.
The scheme would try to overcome limited success of an earlier amnesty scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY), also known as IDS-II, launched in 2017.
Just like the Income Tax amnesty scheme, this gold amnesty scheme is also expected to be open for a definite time period.
Difficulties in implementation include gold that has been inherited, leaving the current owner with no transactional details.
"It would be hard to push people to declare if they have lost almost a third of the value," said an analyst told IANS on condition of anonymity.
Harassment by tax officials is another roadblock that could prevent gold owners from owning up.
This happened during the last two income declaration schemes (IDS) where tax officials were found to be seeking response from people making declarations to explain their source of income.
The industry had suggested a new model for gold amnesty scheme to ensure its success as paying up front taxes on the value assets would attract few takers.
It had said that in return for declared gold, the government could issue 10 year zero coupon bonds with yield on it lower than prevailing rates. The gap in yield could take care of the tax that the declarer has not paid on the black money used to buy gold.
It is being worked out as part of a comprehensive gold policy that is being worked upon per Niti Aayog's suggestions two years ago.
A rough estimate suggests that the Indians collectively hold 20,000 tonne gold, however the actual holding after taking into account unaccounted imports, ancestral holdings etc could be in the range of 25,000-30,000 tonne.
The value of this gold at current prices will be in excess of $1 trillion and $1.5 trillion respectively.