In India, owning gold is not just a matter of wealth but also a cultural tradition. However, many people are unaware of the regulations surrounding the amount of gold they can keep at home without inviting scrutiny from the Income Tax Department.
Here’s what you need to know about these rules, which were detailed in a directive issued by the Income Tax Department in May 1994.
Gold Possession Limits:
- For Married Women: Up to 500 grams of gold jewelry can be kept.
- For Unmarried Women: The limit is 250 grams.
- For Men: The possession limit is set at 100 grams, irrespective of marital status.
These limits are crucial because, during an inspection, the Income Tax Department may inquire about the source of gold exceeding these quantities. Being able to provide receipts or bills related to the purchase of jewelry is essential.
It’s also important to note the mode of payment, which should not be in cash for purchases beyond a specified threshold to avoid seizure of the gold.
Exceeding the Limits:
Owning gold beyond the specified limits is permissible, provided you can substantiate the purchase with proper documentation such as bills, payment receipts, income tax documents, and proof of payment through banking channels.
Failure to furnish these documents may lead to confiscation of the excess gold by the authorities.
Purchase Methodology:
When buying gold, it’s advisable to use non-cash payment methods like debit cards, credit cards, checks, or bank drafts. This practice ensures that the purchase is made with legitimate funds. While buying gold in cash is allowed, it is limited to transactions under ₹2 lakh, and providing a PAN card might be necessary.
Opting for Jewelry:
Experts recommend that any gold kept within the permissible limits should ideally be in the form of jewelry. Possessing gold in other forms such as biscuits, bars, or utensils might not be viewed favorably during tax assessments or raids.
Key Takeaways:
Being aware of these regulations can save individuals from potential legal and financial troubles. It ensures that one’s investment in gold remains a source of joy and security, rather than becoming a liability during an income tax department check.
Always retain purchase documentation and opt for traceable payment methods to substantiate the legality of your gold holdings.