Might India Confiscate the Gold of the Temples?

Throughout the world, the taxman is becoming ever more rapacious, seeking not only increased tax levels, but, as electronic data collection becomes increasingly sophisticated, seeking new sources of tax revenue that, at one time, were too complicated to collect.

In particular, religious organisations have historically been out of bounds for the taxman. However, in modern times the noun "organisation" has become more significant than the adjective "religious." The organizations have, in many cases, become highly sophisticated businesses and many have become quite profitable. As a result, public support for such organisations has dwindled and many people not only condone, but recommend taxation for religious organizations.

India has long held a tradition for anonymous contributions to the temple. The rules say that temples must pay tax on anonymous donations, but this has been difficult to enforce, as a donation that is anonymous has no paper trail. And, as may be expected, although generations of politicians and bureaucrats have sought methods of tax collection, they have equally sought to avoid being seen by voters to be preying on the Temple.

But India has a further wrinkle in the story line. Readers will be familiar with the fact that Indians generally have a strong belief in the concept that gold is money. They therefore hold as much gold as possible and, indeed, commonly wear their wealth in the form of jewellery.

Whilst Indians contribute rupees (paper notes) to the Temple, they also very commonly contribute physical gold—often in the form of jewellery and artifacts, but also as gold coinage and bars. Indians buy as much as 2.3 tonnes of gold every day, and the World Gold Council estimates that Indian temples presently hold roughly 2000 tonnes of gold—at a value of $84 billion.

Tempting Target

One of the sticking points in the discussion is that, culturally, a donation of gold to a temple in India is not the same as in the West. The gold that is given by a devotee is not given to the organisation of the Temple, it is given to one or more of the many deities that the temple represents. (The Hindu religion has numerous deities.) The gold is considered a personal gift from the devotee to his deity. As such, the taxman in India has a further hoop to jump through if he is to get the population to accept the idea that the gold should be taxable, as the Temple is considered the holder of the gold—not the owner.

Recently, the Reserve Bank of India (RBI) has been accused of seeking to "take possession" of the gold in the temples. The RBI has replied that there is "no proposal under its consideration to convert idle gold into bullion at this juncture". However, they have sought to have temples register the gold they hold with the RBI.

Not surprisingly, some devotees see this reporting as a good thing, as it holds the temples accountable to the devotees to make sure the gold is there. Others, however, see the reporting as a first step towards eventual taxation or confiscation by the RBI.

The issue is further complicated by the fact that the organisational arms of some temples have followed the Western model and have chosen to place the gold on deposit in banks, muddying the waters as to whether the gold represents a sacred trust between devotee and deity, or whether it is a temple asset. If the latter, it is arguably a business possession and therefore may be taxed and even confiscated in the future. As the deposits are interest-bearing, the RBI would have a good case to put forth.

To further add to the RBI's case, some temples have gold jewellery made from devotees' contributions to the deities that they then sell back to the devotees. In addition, some temples sell gold to the Mumbai mint, through the State Bank of India.

Muddy waters, indeed. It would seem, from an outsider's observation, that, whilst the relationship between devotee and deity remains an act of faith, the organisations that run the temples are often far more attuned to business and treat the gold the way they might treat a business asset. The Indian Government is likely to say that they can't have it both ways.

If the financial woes of the Government worsen, as seems likely, the temptation will increase for them to tap into Temple resources at some point. Who the actual owners of the resources may be, is likely to become more blurred along the way.

We are heading into a confiscatory era—a time when banks and governments reserve the right to go beyond the old method of taxation and to actually pillage the purse of the public. This has begun with bank accounts and pension funds in some countries, and, as the concept becomes a trend, it will take on many forms. Confiscation of temple, church, or synagogue funds may therefore soon be on the table in a variety of countries.

It is left to the reader to determine whether his own wealth (however large or small) is safe from the grasp of his government. "Safe," of course, is not an absolute. It is most definitely a relative term, depending upon choice of jurisdiction.

The Internationalisation concept suggests that the ideal is to live in one country, hold a passport to another country (several countries, if possible), do banking in a third country, and earn a living in still another country.

To many people, this concept seems so complex as to be unmanageable. However, it can begin quite simply. If, for example, the reader fears the loss of his wealth through confiscation, he may choose to seek out a jurisdiction where the odds of holding on to his wealth are greater and then to move all or a portion of that wealth to the new jurisdiction.

Once an initial step such as this has been achieved, it becomes clear how simple the planting of a second flag actually is. A third flag (for example, an additional residency or passport) then seems even easier.

We have already entered an era in which many countries may be dead-ending. If that premise is correct, Internationalisation may prove to be the saving factor for many who value their freedom and the right to retain what they possess.

(Editor's note: you can find Casey Research's comprehensive, A-Z guide on internationalization here.)

The above information on India is based upon study and observation over a period of years, not on first-hand knowledge from living in India. Therefore, any observation stated above may be deserving of criticism and/or correction. In the quest for accuracy, any reader with first-hand knowledge of the above subject is encouraged to comment in the space below.—J.T.

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