Gold Storage Limit: Many people are fond of buying or wearing gold, but how much gold can you keep in your house, when can the Income Tax Department question you about gold? Very few people know about this. Here know what are the rules regarding keeping gold at home.
Gold Storage Limit: The importance of gold in India is not limited to just a yellow metal. It is a part of our culture, tradition and emotions. Buying and wearing gold on every happy occasion, from festivals to weddings, is considered auspicious. Many people also buy it as an investment, considering it a companion in difficult times. But amidst this attachment to gold, one question often troubles people – “How much gold can we legally keep in our house?”
Many people have the fear of income tax raids and they worry that their hard-earned or inherited gold may be confiscated. If you are also fond of buying and wearing gold, then it is very important for you to know these rules, so that you can avoid any kind of trouble.
Biggest confusion: Is there any upper limit on keeping gold?
First of all, let’s clear this biggest confusion. According to the law, if you have a legitimate source and proof of buying gold, then you can keep any amount of gold with you. Yes, there is no upper limit on keeping gold in your house. If you have bought gold from your income, which you have shown in the income tax return, or from tax-free income like agriculture, or you have inherited it and you have its documents, then you do not need to worry.
So then what is that thing about 500 grams and 250 grams? Actually, this limit is not for keeping gold, but for not confiscating gold during income tax raids.
How much gold is ‘safe’ during income tax raids?
The Central Board of Direct Taxes (CBDT) had issued a circular in 1994, in which it was clarified that a certain amount of gold jewelry will not be confiscated under any circumstances, even if the person’s income and the amount of gold do not match. This rule was made so that common people are not harassed regarding ancestral and marriage jewelry.
According to the CBDT rule, this limit is as follows:
- Married woman: 500 grams of gold jewelry.
- Unmarried woman: 250 grams of gold jewelry.
- Male member of the family: 100 grams of gold jewelry.
Example: If a family has a husband, wife and an unmarried daughter, then they can
legally keep a total of (100 grams + 500 grams + 250 grams) = 850 grams of gold jewelry without any proof. The Income Tax Department will not confiscate jewelry up to this limit during the raid.
What if there is more gold than the limit?
Now the question arises that what will happen if someone has more gold than this limit? In such a situation, the Income Tax Officer will ask you the source of that extra gold. If you show valid proof and documents related to the purchase of that gold, then your gold is completely safe and it will not be confiscated. But if you are unable to give any account or proof of that extra gold, then the officer can confiscate that gold and you can also be fined heavily.
How will you prove that the gold is yours?
It is very important for you to have these documents to keep your gold safe:
Tax invoice/bill
If you have bought gold, always take a proper bill from the jeweler. This is the strongest proof.
Inheritance or will papers
If you have inherited gold from your parents or a relative, then keep the papers related to the will or family partition safely.
Gift deed
If someone has gifted you gold, a gift deed is a good legal proof.
Proof of income
Documents like a copy of your income tax return (ITR) and bank statement prove that you had sufficient income to buy the gold.
Do these rules apply to gold biscuits and coins as well?
The 500/250/100 gram exemption given by CBDT is mainly for gold jewellery. If you have gold coins or bars, you must keep a record and a proper bill for every gram. Jewellery is a little more lenient, but biscuits and coins are considered direct investments and proof is almost certain to be sought for it.
Frequently asked questions (FAQs)
1. Is this limit for the entire family or for each member?
This limit is different for each member of the family (married woman, unmarried woman and man), as mentioned above. This is not a combined limit for the entire family.
2. What if I buy gold in cash?
Buying gold in cash above a limit can land you in trouble. It is better to pay through digital payment or cheque/card and always get a proper bill. If you buy gold in cash, you may find it difficult to tell its source.
3. What is the rule for gold jewellery received at a wedding?
Gold received at a wedding is considered a gift. For this, you can keep the wedding card, wedding photos and if possible, a written letter from the gift giver. This helps to prove that the gold has been gifted to you.
4. Do these rules apply to digital gold or sovereign gold bonds (SGB)?
No. These rules apply only to physical gold. Digital Gold, Gold ETFs or SGB are held in demat form and are considered part of your financial holdings.
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