The short answer: Yes, but it is protected if you can prove it was bought with legitimate income.
Here is what this is all about.
Following the enactment of the Taxation Laws (Second Amendment) Bill, 2016, there were apprehension that jewellery acquired from disclosed sources or exempted income shall become taxable - people were worried that they will now have to pay tax on all their jewellery.
To clarify that that’s not the case, the government released a statement that the new bill has not introduced any new provision regarding chargeability of tax on jewellery. The tax rate will be increased “mainly in those cases where assets or cash etc. are sought to be declared as ‘unexplained cash or asset’ or where it is hidden as unsubstantiated business income, and the Assessing Officer detects it as such," the release said.
As far as jewellery is concerned, if it is purchased out of 1) disclosed income, 2) exempted incomes like agricultural income, 3) reasonable household savings or 4) legal inheritance, it will not be taxed according to the old or the new law.
However, as before, during a search or a raid, if there is more than 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family, then it can be seized. But the seizure will be fully protected if its legitimacy can be proved.
So, if you have too much gold at home, you will raise suspicion, but you are safe if it was bought with legitimate income. But if you cannot, you could be in trouble.
Govt clarifies jewellery/gold purchased out of disclosed income or exempted income or reasonable household savings is NOT chargeable to tax
— Ministry of Finance (@FinMinIndia) December 1, 2016
Apprehension that jewellery with household acquired-out of disclosed sources or exempted income shall become taxable,is unfounded & baseless
— Ministry of Finance (@FinMinIndia) December 1, 2016
Govt further clarified that jewellery/gold legally inherited & acquired out of explained sources, is also NOT chargeable to tax.
— Ministry of Finance (@FinMinIndia) December 1, 2016