How much Gold you can hold?

Gold has always been considered as a safe investment tool for Indians and there have been lots of rumours in terms of how much gold you can hold legally. Let us understand this in detail:

How much Gold you can hold?

There is no prescribed limit for you to hold any amount of gold jewellery or ornaments provided you are able to explain the source. What it means is that as long as you are holding any jewellery item bought out of your savings from already taxed money or may have received it via inheritance, there is no limit. 

What proof can be shown to justify the source?

The tax invoice you get on purchase of gold from your jeweller is the best proof to justify your investment. And in case the gold was received via inheritance or a gift then you need to submit a copy of “will” or any family settlement document, gift deed or a receipt in the name of a person who had gifted you. Even your social status, your community’s traditions or customs can also work as a proof but in that case, it depends on the discretion of the concerned officer.

What happens if you cannot justify the source?

In case you cannot justify the source then the officials have the rights to seize your gold to the extent it is not matching your income level as reported in your tax returns. But there is a relief which is given on the amount of gold you can hold up to a specified limit up without justifying the source. What it means, is that even if you do not any proof of where the gold has come from, then also the officials cannot confiscate your gold. In fact, ​Central Board of Direct Taxes (CBDT) has come out with a clarification on December, 1 2016 because post demonetization, there were many rumours around this. This particular CBDT clarification reinforces the previous directions issued in the year 1994 with respect to the amount of gold one can hold without attaching any seizure during any income tax raid or proceedings. 

What are the limits up to which you can hold gold without worry?

The circular clarifies that your jewellery and ornaments will not be seized subject to the following limits:-

1.    500 grams for a married lady,
2.    100 grams for a male 
3.    250 grams for an unmarried lady
 
What does these limits mean to you?

It means that every member of your family depending upon whether male or female, married or unmarried, can hold the specified limit of gold without having to justify the source of owning that gold. The IT officials cannot seize the specified quantity of gold jewellery even if your income does not justify it. 

Is every form of jewellery allowed in this limit?

No; the circular only exempts the confiscation of gold ornaments & jewellery but not the gold coins or bars. The officials can always seize your gold coins or bars wherever you are not able to justify the source even though that the gold bars or coins you hold is coming well within the prescribed limits.

Conclusion:

There is no need to worry for the amount of gold what you hold in case you have all the proofs in place or it falls within the specified limits as mentioned in the article. 

Rishabh Parakh is a Chartered Accountant and the Chief Gardener of Money Plant Consultancy, a leading Tax & Financial Services Provider.