The festive season is here again and also time to buy gold. However, how much gold you can legally hold?
The festive season is here again and also time to buy gold. After all, buying gold is considered auspicious during such times, and is believed to bring prosperity and good luck going ahead. However, the million-dollar question which many of us often ignore is: How much gold a person can hold or, to make it more explicit, is allowed to hold in the present times in India?
The question assumes importance particularly in view of the recent changes in income tax laws as well as the government’s thrust on unearthing black money. Even if one is honest, but one’s image can get sullied if there is an income tax raid at one’s premises. So, what to do in these circumstances to remain legally correct as also to keep income tax authorities at bay?
Tax experts say that you need not worry if you are able to explain the source of your investment in gold.
“It may be recalled that CBDT, in its press release dated 01 December, 2016, had clarified that there is no limit on holding of gold jewellery or ornaments by anybody provided he is able to explain the source of such investment. However, in case any search is conducted for the taxpayer, the tax officials can confiscate the gold and/or jewellery if it is found that the investment is not in line with the income level of the assessee as reported in his past tax returns,” says Chetan Chandak, Head of Tax Research, H&R Block India.
Even in this case, however, it has been clarified that jewellery and ornaments to the extent of below limits will not be seized, even if prima facie it seems to be disproportionate with the income records of the assessee:
# 500 grams for married lady,
# 250 grams for unmarried lady and
# 100 grams for male member
Further, the officer conducting a search has discretion not to seize even higher quantity of gold jewellery based on factors, including family customs and traditions.
It is clear, thus, that if the investment in gold or jewellery is in line with the income of the taxpayer and/or the taxpayer is able to explain the source of that investment/inheritance, he has no reasons to worry.
What kind of proof may be required?
Generally the tax invoice issued by a jeweler is the best proof of your investment in gold. However, “in case of inheritance or gift you can produce proof such as receipt in the name of original owner, family settlement deed, Will, gift deed, etc. If you don’t have any such document, then the officer will try to match it based on factors such as family social status, customs, traditions, etc., but then it goes to the discretion of the tax officer,” informs Chandak.
What precautions to take?
You need to remember that the limits stated above for search and seizure are for individual taxpayers and in case you have a single locker in which you are depositing the gold belonging to different family members, then the limit will be enhanced to the total of the limits for each individual taxpayer. In this case, however, it is advisable to have the locker in joint names to avoid any complication.