A majority of Indians — irrespective of age and earnings — obtain gold for a assortment of factors. While some obtain it for investment purposes, a lot of other folks go for it on unique occasions like festivals and weddings, basically mainly because shopping for the yellow metal is believed to be auspicious throughout such occasions and is supposed to bring prosperity and very good luck going ahead. Lots of persons also preserve shopping for the valuable metal anytime they have spare cash as they think that there is no ideal or incorrect time for shopping for gold.
However, when greater liquidity and sentimental attachment towards gold make it element of virtually everyone’s portfolio, the million-dollar query is: How substantially gold a particular person can legally hold in India?
The query becomes critical specifically in view of the Modi government’s thrust on unearthing black cash and the current alterations in earnings tax laws. What to do, as a result, in these situations to stay legally right as also to preserve earnings tax authorities at bay?
Tax professionals say there is no have to have to be concerned exactly where the supply of such holding is reputable.
It may possibly be noted that Section 132 of the Income Tax Act, 1961 confers energy to the Indian tax authorities to seize any unexplained jewellery, bullion or important articles located at the time of search.
There is, nonetheless, no limit to the quantity of gold an person can possess exactly where the supply of such holding is reputable and can be explained. “Such explanation could be by way of furnishing of purchase/exchange invoices in case of original purchase or exchange of jewelry, a copy of Will or family settlement deed in case of ancestral or inheritance jewelry, and a gift deed in case of jewelry received as gift,” says Sudhakar Sethuraman, Partner, Deloitte India.
In terms of the quantity of gold an person can possess, the Central Board of Direct Taxes (CBDT) vide press release dated 01 December 2016 had clarified that that there is no limit on holding of gold jewellery or ornaments by anyone supplied the identical is acquired from sources explained such as inheritance. For this goal, the CBDT relied on its earlier instruction no.1916 dated 11 May 1994.
“While the Wealth Tax Act, 1957 has been repealed, one can look at the same to infer the meaning of gold whereby the same has been explained to cover alloy, whether virgin, melted, re-melted, wrought or unwrought, in any shape or form of a purity of not less than nine carats and includes any gold coin (whether legal tender or not), any gold ornament and other article of gold,” says Sethuraman.
“Based on the clarification issued by CBDT time and again, an individual can hold any quantity of explained gold and the prescribed limits of unaccounted gold to avoid the taxman’s ire. The taxman, however, has a right to search or question the gold either from the residential premises or the locker maintained at the bank,” he adds.
In case any search is carried out, the tax authorities can confiscate the jewellery or gold if it is located that the investment is not in line with the earnings level of the assessee as reported in his previous earnings tax returns.
Even in this case, nonetheless, it has been clarified by the Ministry of Finance that jewellery and ornaments to the extent of beneath limits will not be seized, even if prima facie, it does not appear to be matching with the earnings record of the assesse.
# 500 grams for married lady,
# 250 grams for unmarried lady and
# one hundred grams for male member
Moreover, the earnings tax officer conducting search has discretion not to seize even greater quantity of gold jewellery based on components, such as family members customs and traditions.