The Gold Bonds (Immunities and Exemptions) Act, 1993

The Gold Bonds (Immunities and Exemptions) Act,1993 mentioned Act was enacted by Parliament on 44th year of the Republic of India which came into force on the 31st January 1993. The subscribers of Gold Bonds are provided with certain immunities under the Act and also exempted from direct taxes with regard to such bonds and any matters connected thereto. The Act was enacted with a view to assembling the indolent gold resources of inhabitants in India. Such residents are provided with some immunities and exemptions to contribute to such Gold Bonds.

Section 2 of the Act speaks about the definitions of various terms like Gold Bonds, subscriber individual (legal heirs too). Gold Bonds means under Section 3 bonds issued by the Central Government.  It should be in accordance with the scheme framed by that Government.A subscriber who has initially subscribed to the Gold Bonds can be a firm or a company, a Hindu undivided family, trustees of a trust, but they should be a resident of India. The term individual includes all the legal heirs and all the members of Hindu undivided family who has a share in the Gold Bond when partition has taken place.  Every word and expressions shall have the same meaning to them as it has been used under this Act and which has not been defined/defined under Income Tax Act 1961.

Section 3 of the Act mentions about the Gold Bonds Scheme.By notification in the Official Gazette the Central Government can frame schemes for subscription of the Gold Bonds which can be on or after the commencement of this Act but it should be before a quantified date.  It also clearly states about the“specified date” which is 31 March 1993.  While the Central Government can notify in the Official Gazette any other later date on this behalf.These schemes can be laid before each House of Parliament as soon as it is framed.

 Subsection 1 of Section 4 of the Act states about immunities and clearly explains that none the less anything stated in the Wealth-tax Act, 1957, the Income-tax Act, 1961, the Foreign Exchange Regulation Act, 1973, the Gift-tax Act, 1958, the Customs Act, 1962, and the Foreign Contribution (Regulation) Act, 1976,no subscriber who subscribed for the Gold Bonds shall disclose the nature and basis of acquiring such gold including the root of money under which the gold was acquired.Clause B of Section 4 states that any subscriber just on the ground that he/she owns the gold bond shall not be investigated under the above said Acts.  Clause C says that if a subscriber who owns a Gold Bonds shall not admissible as evidence in any actions/proceedings under above mentioned Acts.  One exception to this is that before the commencement of this Act if any proceedings has already been initiated with regard to gold subscribed by any subscriber then anything contained in this sub-section shall not apply to any such proceedings.  Sub-section 1will not apply in relation to any offence punishable under Chapter 09 or Chapter17 of the IPC (45 of 1860), the Terrorist and Disruptive Activities (Prevention) Act, 1987 (28 of 1987), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Prevention of Corruption Act, 1988 (49 of 1988) or for the purposes of implementation of any of the civil liability.

Section 5 states about Gold Bonds that cannot be considered in certain matters.Sub clause “a” says that Income-tax Act, 1961 provisions will not apply to any interest amassing from the Gold Bonds to the subscriber.  And also if the subscriber has any long-term capital gains then also this provision will not apply on that.When a subscriber gifts a gold bond to an individual either his spouse, child or parent the Gift Tax 1958 provisions will not apply. Section 6 states about repealing and savings of The Gold Bonds (Immunities and Exemptions) Ordinance 1993. Although it is repealed anything done under the said Ordinance will be considered to have been done under the provisions of the above said Act.

Honourable Shri Atal Bihari Vajpayee had said that the Gold Bonds are very beneficial for the country.  Central government made some schemes under sub-section (1) of section 3 of the Gold Bonds (Immunities and Exemptions) Ordinance, 1993 like Gold Bonds Scheme 1993 which came into force on 15 March 1993. Bank of England provided the Reserve Bank of India 405 million dollars in February 1991 for pledging gold.  Gold reserves can be said to be similar to foreign currency reserves.