Akshaya Tritiya Gold Holdings: Understanding Legal Limits at Home

Gold Ownership in India: What You Need to Know

Keeping gold at home is a common practice, often in the form of jewellery, coins, or bars. As Akshaya Tritiya approaches, a question on many minds is how much gold one can legally hold without attracting the scrutiny of tax authorities.

The Central Board of Direct Taxes (CBDT) does not have a fixed upper limit on owning gold, but there are guidelines on how much can be held without needing to explain its source during a tax inquiry. According to Mihir Tanna, associate director of direct tax at SK Patodia & Associate LLP, income-tax laws do not prescribe any limit on the amount of gold an individual can legally own. However, individuals are expected to provide the source of acquisition and ensure it has been duly disclosed for income-tax purposes, if applicable.

From a disclosure and source-explanation perspective, the income-tax framework is relevant, particularly during search and seizure proceedings. In this context, individuals are required to submit a personal balance sheet, including details of jewellery, if their total income exceeds Rs 1 crore.

Read also: Correcting Credit Score Errors: A Guide to Ensuring Accurate CIBIL Reports and Optimal Loan Eligibility

During I-T searched, the income-tax department can seize gold, but income tax provisions set limits for non-seizure of gold jewellery and ornaments up to prescribed limits. According to Suresh Surana, a Mumbai-based chartered accountant, the CBDT has laid down guidelines for seizure of jewellery during search operations.

Where gold is held in excess of these limits, it can be retained by the taxpayer, provided they are able to satisfactorily explain the source of acquisition, such as inheritance, gifts (including those received on marriage), or past disclosed income. In the absence of a satisfactory explanation, the value of such gold may be treated as an unexplained investment and taxed accordingly.

The finance ministry has clarified that there is no restriction on holding gold if the source of acquisition can be substantiated. While there is no prescribed ceiling on holding gold at home, taxpayers should ensure that adequate documentation or a reasonable explanation is available to substantiate the source of such holdings, especially in the context of search or scrutiny proceedings under the income-tax law.

Read also: Missing a Single EMI Payment Can Adversely Impact Credit Profile

In cases where an individual's total income exceeds Rs 1 crore during FY 2025-26, the details of such holdings are also required to be disclosed under Schedule AL (Assets and Liabilities) in the income-tax Return.