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Gold in the form of jewellery can be held in any amount provided one has supporting documents
Considered a safe haven, gold is an instrument of investment for all seasons. Though the stock markets rose phenomenally in the past one year – the Sensex zoomed from below 27,600 in April ’20 to more than 52,000 in February ’21 — gold, too, kept pace climbing from Rs 42,300/10 gms in April to Rs 58,360/10 gms in August. In other words, gold recorded a rise of almost 38% in just about five months.
In this season of heady price movement it is necessary to have a look at the limits of gold that one can possess.
According to Section 132 of the Income Tax Act 1961, authorities have the power to seize any unidentified jewellery, bullion, or valuable metals discovered during a search.
The law, in fact, has set a limit to the gold that one can possess. A married woman can possess a maximum of 500 gms of gold while for an unmarried woman the ceiling is 250 gms of gold. A male can possess a maximum of 100 gms of gold.
However, there are two qualifications. One, the person should be one who does not fie IT returns. Two, this gold must in non jewellery forms. Or, in other words, coins or bars.
The law says there is no limit to holding gold in jewellery form as long as one can give proof of the source of funds. If one has received the jewellery as inheritance, one has to prove it with the help of wills. In December 2016 Central Board of Direct Taxes (CBDT) stated that there is no cap on keeping gold jewellery if the source of investment or inheritance can be clarified.
“This limit on possessing gold is mainly applicable for non-IT filers. Gold beyond this limit holding is permissible but with some terms and conditions. If you cannot prove your holdings with the help of wills, IT officials can seize your gold. Gifts, too, have to be declared in writing or through family agreements,” said tax consultant Narayan Jain.
Incidentally, from 2019 everyone buying gold in excess of Rs 50,000 has to submit PAN.
Lawyers advise that all receipts of gold purchase be it for jewellery or investment purpose should be preserved carefully for any future reference.