Buying gold jewellery is an age-old tradition in Indian families. While some buy it for consumption (own use) purpose, others buy it for investment purposes. In India, gold is also bought for gifting on occasions like marriage, birthdays and other functions. Many Indians also buy gold when they have an investible surplus. In some families, buying gold is always believed to be auspious on occasions like Dhanteras, Diwali and Akshay Tritiya.
While most of the families in India hold gold, they must know how much gold a person can legally hold in India?
This question holds significance as holding excess gold can attract income tax scrutiny especially, in view of the Modi government’s thrust on unearthing black money and the recent changes in income tax laws. So in order to remain legally correct, you should know the laws pertaining to gold holding.
According to income tax experts, one should not worry if the source of gold holding is legitimate and as per the income level of the individual.
Worth mentioning here is that as per Section 132 of the Income Tax Act, 1961, tax authorities can seize any jewellery, bullion or valuable articles found at the time of search if you can not justify the source.
As per income tax laws, there is no limit to the quantity of gold an individual can possess if the source of such holding is legitimate and can be explained. If you have purchased that gold then you can show the original invoicesor if you have inherited gold from your family then you can furnish a copy of Will or family settlement deed. If jewellery is received as a gift, then you can furnish the gift deed.
The Central Board of Direct Taxes (CBDT) vide press release dated December 01, 2016, had clarified that there is no limit on holding of gold jewellery or ornaments by anybody provided the same is acquired from sources explained including inheritance. For this purpose, the CBDT relied on its earlier instruction no.1916 dated May 11, 1994.
According to the clarifications issued by CBDT time and again, an individual can hold any quantity of explained gold. But the taxman has always the right to search or question the source of gold holding at residential premises or in the locker maintained at a bank.
In case of any income tax search, the tax authorities can confiscate the jewellery or gold if it is found that the gold holding is not in line with the income level of the assessee as reported in his past income tax returns.
However, the Ministry of Finance has clarified in this context that jewellery and ornaments to the extent of below limits will not be seized, even if prima facie, it does not seem to be matching with the income record of the assessee.
– 500 grams for a married lady,
– 250 grams for unmarried lady and
– 100 grams for male member
Even, the income tax officer conducting a search may not seize even higher quantity of gold jewellery based on factors, including family customs and traditions. It is solely at the discretion of the officer.