How much gold can you hold?

Gold has always been considered as a safe-haven investment tool for most Indians. There has been a number of rumours in terms of how much gold you can hold legally. Let us understand this in detail.

How much gold can you hold? Unlimited! Yes, it is true. 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 the already-taxed money or you have received it via inheritance, there is no limit.

What types of proof can be shown to justify the source? Tax invoice. Yes, the invoice that 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, you need to submit a copy of the “Will” or any family settlement document, gift deed or a receipt in the name of the person who had gifted you. 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, 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, without justifying the source. What it means is that even if you do not have any proof of where the gold has come from, then too 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 demonetisation, there were many rumours around this. This particular CBDT clarification reinforces the previous directions issued in 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 for holding gold without worry? The circular clarifies jewellery will not be seized subject to these limits— 500 gram for a married lady; 100 gram for a male member; 250 grams for an unmarried lady.

What do these limits mean? Your family members depending upon factors like gender and marital status 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. Let me give you an example —You have a family consisting of total five members, two of them are unmarried females, one is a married female, one is a married male, while the last one is an unmarried male. Now, the total gold you all can hold as a family is 1,200 gram as given in the table.

There is a difference in terms of allowable gold limit for a female based on whether she is married or not but in case of a male member, the limit is the same irrespective of their marital status.

Does every form of jewellery is allowed in this limit?

No. The circular only exempts the confiscation of gold ornaments and jewellery but not 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 the gold bars or coins you hold is coming well within the prescribed limits.

There is no need to worry about the amount of gold you hold in case you have all the proofs in place or it falls within the specified limits as previously mentioned. But anything beyond this needs to be justified with a supporting evidence.

BE WELL-VERSED WITH TERMS

• You can hold unlimited amount of gold if buying out of your own savings from already-taxed money
   
• Officials can always seize your gold coins or bars wherever you are unable to justify the source for the same

The writer is chartered accountant and chief gardener, Money Plant Consultancy