Policy

Finance ministry may consider amnesty scheme for those hoarding gold

Bloomberg | Updated on July 30, 2020 Published on July 30, 2020

The Finance Ministry is considering an amnesty scheme for residents with illicit stash of gold, as part of an effort to crack down on tax evasion and cut its dependence on imports, according to persons with knowledge of the matter.

Under the proposition made to Prime Minister Narendra Modi, the government plans to ask people with unaccounted holdings of the metal to declare it to tax authorities and pay levies, penalty, sources in the know-how said, asking not to be identified. The proposal is at an early stage and authorities are seeking feedback from concerned officials, they said.

Modi unveiled three state-backed plans in 2015 to try to tap the world’s largest private gold stash of about 25,000 tons held by households and institutions to trim physical demand, and reduce imports by providing people with alternative avenues for investment. The programs failed to generate interest as a section of the people didn’t want to part with their gold, usually in the form of jewellery, while others feared being penalized by tax authorities.

Consumers who declare their hoard will need to deposit some of the legalized gold with the government for a few years, they said.

Any proposal for an amnesty is fraught with risks as the country’s top court has ruled that citizens cannot claim absolute amnesty following criticism that such programs penalize honest tax payers. A finance ministry spokesman was not immediately available for a comment.

Gold has soared almost 30% to a record this year as the pandemic drove demand for havens amid a weaker dollar and low interest rates. With more stimulus on the horizon, Goldman Sachs Group Inc. has said that bullion is the currency of last resort and forecasts a surge to $2,300 an ounce.

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Published on July 30, 2020
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