Gold is more than a precious metal in India. It represents traditions, customs, love and a lot of emotions. But as much as Indians love to hold gold, there is confusion as to how much of gold can people keep including the inherited and purchased.
In order to clear the doubts the CBDT issued a clarification on 1st December, 2016. This circular reiterates the earlier directions issued to income tax officers in connection with seizure of gold jewellery and gold ornaments at the time of income tax raid, which was issued on 11-05-1994.
After reading this article you will discover the legality behind holding of gold.
No maximum limit to hold Gold
This circular defines the limit for seizure but it no where specifies the ceiling or maximum amount of gold that you can own, which means that the gold will not be seized to the extent of the limit but you may still be asked to explain the source.
If you have acquired the gold from explained sources of income including inheritance then there is no maximum limit on holding of gold jewellery or ornaments. However, your ITR should correspond to the amount of gold which you are holding.
Moreover, it is advised that you keep the invoice of your purchase. In case of exchange of gold jewellery, keep a copy of invoice of the exchange along with the invoice of the original purchase.
In case of inheritance it is advised to keep a copy of Will. It acts as a proof of your inheritance. If the person from whom you have inherited the gold was wealth tax payer it becomes easier to establish the quantity of gold inherited by you.
Wealth tax has been abolished but you still had a liability to disclose your wealth in case it exceeded Rs. 30 lacs and file the return up to 31 March 2015. So if you have filed your wealth tax return where you have disclosed the gold you own then your ownership gets verified and you can keep the gold.
What if you can’t explain the source of your gold?
The circular issued by CBDT specifies that a married lady is allowed to keep up to 500 grams of gold jewellery; an unmarried lady can hold up to 250 grams and a male member of the family can keep up to 100 grams of gold ornaments and jewellery.
Under the above specified limit, it includes both inherited and purchased gold jewellery. Even if you don’t have supporting documents for the above amount of gold jewellery, it will not be seized. However, it does not include gold coins and bars. The gold coins and bars can be seized even if it is within the limit specified above.
If you have gold more than the limit specified above and you can explain the source of it, the officer in charge may not seize the gold depending on the facts of the case.
This limit does not include the gold that you may be holding on behalf of someone else. So if there’s a raid at your place and you are holding the gold of your relatives or friend, then this gold will not be included in the above limit and may be seized.
For instance, if there are 4 members in your family, one married female, one unmarried female, one married male and one unmarried male, then the total amount of gold that will not be seized amounts to