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Have you ever thought about how much gold/gold ornaments can a person hold legally? It may have come across your mind at some stage of your life. In this article, we will answer this question of gold storage limit without vexing the income tax department.
Table of Contents
So to first answer the question, you can hold or possess as much gold/gold ornaments as you desire however you should be able to explain and prove the source of such acquisition from disclosed sources. Apart from this, there is no limitation of holding any quantity of gold or gold jewellery.
The Gold Control Act 1968 had imposed various restrictions on the quantity of the gold/gold ornaments that a person is permitted to hold, but this Act was repealed in 1990.
There isn’t any requirement in the Income Tax return for an income tax assessee to disclose the gold/gold ornaments held by him. However, under the Wealth Tax Act 1957, an assessee was required to disclose the quantity and the valuation of gold held by him, but the wealth tax act stands repealed also.
However, in case of assesses who filed their wealth tax return would have provided the details of gold or gold ornaments held by them. Therefore the precious metals/jewellery shown in the wealth tax returns are disclosed duly, and such persons can legally hold such precious metals etc., without any fear of seizure.
Now in case where the person didn’t file Wealth tax return due to any reason but owns precious metals/ornaments, still such person doesn’t need to fear if the acquisition of the said ornament can be proved for an anterior date. An example, in this case, would be like if a woman was married in 1980’s and she got gold ornaments at the time of her marriage, and if she could prove the same with evidence that the gold held by her are the same, it would be disclosed jewellery and can’t be seized by the authorities. Likewise, if a person bought precious metals from a VAT/GST registered dealer, then also it can’t be seized.
The search team under income tax act follows the process mentioned below:
The Central Board of Direct Taxes (CBDT) has issued some guidelines in the matter of seizure of jewellery.
The following guidelines have been laid down in case where search parties come across items of jewellery:
It is worth mentioning here that a majority of the officials/assesses are not aware of these guidelines, which is binding on the income tax officers.
While buying gold/gold ornaments, make sure that you take and retain tax invoices for the purchase. As per tax experts, you do not need to worry if you can explain the source of investment in gold. Further, the CBDT had specified in its press release in 2016 that there isn’t any limit on holding of gold jewellery provided that the source can be explained.
Read our article: Gold Loan Market in India: Growth and Its Causes
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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