How much gold can you legally possess in India?
Gold has always been one of the most preferred forms of jewelry and the safest investment option in India. But do you know how much gold a person can hold, or is allowed to possess, in light of the government's crackdown on black money and present income tax laws? Take a look at the answer to this "important" question in detail!
Prescribed limit for possessing gold jewelry?
There's no limit on holding any amount of gold jewelry/ornaments if the possessor can justify its source. No limit has been prescribed for possessing gold ornaments bought by individuals out of their savings money, which has already been taxed, or money received through inheritance.
How can you justify the source of gold jewelry?
Individuals need to have proofs, like the invoice of purchase from the jeweler. If someone inherits gold or receives a gift, they need to have a copy of the will of the person from whom it was inherited or a family-settlement document, gift deed or a receipt from the person who gifted gold. Sometimes, one's social status, community traditions, customs could be considered proof.
Tax officials can seize gold without proof
If an individual cannot justify the source of possessed gold, tax officials have the right to confiscate the same, if it doesn't match the person's reported income level. However, a specified amount of gold can be held without proof or stating where it has come from. Officers cannot seize the gold if it's under prescribed limits, which depend on one's gender and marital status.
CBDT's clarification post-demonetization
Post-demonetization, there were several rumors about the limit of gold jewelry/ornaments one can legally hold. On 1 Dec'16, Central Board of Direct Taxes (CBDT) issued a clarification saying there's no such limit if the possessor is able to explain the source of the gold investment.
Prescribed limits for holding gold without proof
The limit for possessing gold without explaining the source of owning it depends upon various factors. According to CBDT's circular, gold jewelry wouldn't be confiscated if it is under these limits: 100gms for a male, 250gms for an unmarried lady, and 500gms for a married lady. I-T officials can't seize the specified amount of gold even if the income level doesn't justify it.
Limit different for men and women
The CBDT's circular says the allowable gold limit (without proof) differs for a lady based on whether she is married. However, in case of a male individual, there's no such difference in the specified limit, meaning it is irrespective of a man's marital status.
Specified limit doesn't apply to all forms of gold
It is essential to understand that the allowable gold limit doesn't apply to all forms of gold investment. While gold jewelry/ornaments are exempted (within specified limits, without proof), gold bars and coins are still confiscatable if the possessor cannot justify their source, even if they are under the prescribed limits. However, there's no need to worry if one has all the required proofs/documents.