wealth tax

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pradeep (Querist)
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11 December 2010 Whether e gold attract wealth tax liablity under jewellery
- and if the answers is yes
then whether the same would be liable for wealth tax if kept in demat form

sachin

sachin (Expert)
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13 December 2010 Gold is liable for Wealth tax act under the head jewellary. This is as per sec 2(ea)(3). Only gold deposit bond issued by govt is not taxable.

pradeep

pradeep (Querist)
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13 December 2010 Yeah sir i agree with ur view but where in the section it is mentioned that Gold kept in Demat form is liable for wealth tax,becoz i require a strong reason to show my client that the same is liable for wealth tax.

sachin

sachin (Expert)
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13 December 2010 Dear Pradeep ji

Proviso to sec 2(ea)(3) specifically excludes gold deposit bond from the net of wealth tax act. So it is interpreted that gold kept in demat form is taxable. Jewellery's of any kind except Gold deposit bond is taxable for wealth tax act.

Sunali

Sunali (Expert)
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13 December 2010 As per Section 2(ea)- Jewellery, bullion, furniture, utensils and any other article made wholly or partly of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals are treated as “assets”.

Hence, for the purpose of Wealth Tax liability, physical delivery(ownership in real terms) is very important. However, in case of Gold ETF's Gold is traded like shares on commodity stock exchanges not followed by physical delivery. Hence in case of Gold ETF's there is no Wealth Tax liability.

But in the given case, Gold is held in demat form i.e. it actually belongs to the assessee and not just for the trading purposes. So, agreeing by the view given by Mr. Sachin, even in my opinion, Gold held in demat form is liable to wealth tax as only Gold Deposit Bonds are explicitly excluded from wealth tax liability.

pradeep

pradeep (Querist)
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13 December 2010 thanks for reply sunali mam i also agree with sachin sir view

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