The Income Tax Department will not seize jewelry and ornaments to the extent to these limits, even if the same does not seem to be matching with the income record of the assessee.
India’s infatuation with gold has been there for a long time and over the years it has only grown stronger. No wonder, Indians consume the most gold globally. Real estate and gold make up almost two-thirds of Indian household savings. For Indians, gold is considered more than an investment. Hence, it has found a significant place in their homes.
However, according to the Income Tax rules, there is a limit on how much gold one can keep at home. Kapil Rana, Founder, and Chairman, HostBooks Ltd, says, “For storage of household gold no justification is needed on one’s income status if the parameters mentioned for different categories of people such as individuals like married women, unmarried women, and a male member of the family are fulfilled.” A married woman can hold up to 500 grams of gold, whereas, an unmarried woman can hold up to 250 grams of gold, even if they fail to produce their income proof. Male members are allowed to hold only 100 grams of gold without justifying their income status.
Hence, the Income Tax Department will not seize jewelry and ornaments to the extent of 500 gms for married lady, 250 gms for unmarried lady, and 100 gm for the male member, even if the same does not seem to be matching with the income record of the assessee.
In a Central Board of Direct Taxes (CBDT) press release dated December 1, 2016, it was clarified that there is no limit on holding of gold jewelry or ornaments by anybody provided it is acquired from explained sources of income, including inheritance. Hence, the Income Tax Act does not prescribe any limit for holding gold and ornament by any person, given you are able to show/explain valid sources of the gold acquired.
What happens if you keep gold beyond such limits at home
As long as you are able to provide the source of acquisition of gold or jewelry, there is no limit for holding gold jewelry or ornaments by anybody. In other words, if that individual person keeps gold beyond such limits at home then he/she should be able to explain the source of income from which the gold is being acquired.
In case, if the holding is in excess, one has to consider for the source of income, proof of investment will help you in establishing the source of investment against your income tax return. Apart from the tax invoices that you would keep, it is a little tricky that what kind of proof is necessary in case of inheritance and gifts. To specify more, experts suggest, in case of inheritance or gift, details like a gift deed or receipts with the name of the initial owner of the item may be needed, or one can produce a family settlement deed, Will, or a special gift deed stating the transfer of such item in the owner’s hand.
Gopal Bohra, Partner, NA Shah Associates, says, “A person is required to declare the value of Jewellery in Wealth Tax Return (abolished from FY 2016-17) and under ‘schedule Fixed Assets’ in Income Tax Return and give details of jewelry if taxable income for the year is more than Rs 50 lakh. Hence, there should not be any mismatch between the value declared in the return and physical. If there is any difference, the person should be able to explain the discrepancy.”