Shopping for Gold on Akshaya Tritiya? Know the Legal Limits

Storing gold at home is a widespread practice, whether in the form of jewelry, coins, or bars. With Akshaya Tritiya, a day considered auspicious for purchasing gold, just around the corner, many are left wondering how much gold they can possess without triggering the attention of tax authorities.

The Central Board of Direct Taxes (CBDT) has not established a specific upper limit for gold ownership. However, there are guidelines regarding how much gold can be kept without necessitating an explanation of its source during tax inquiries. Mihir Tanna, an associate director of direct tax at SK Patodia & Associate LLP, explains that while there is no legal limit, individuals must be prepared to disclose the source of their gold holdings for tax purposes if required.

During income tax searches, authorities have the right to seize gold, but there are protections in place. According to CBDT guidelines, married women can keep up to 500 grams of gold jewelry, unmarried women up to 250 grams, and male members up to 100 grams without fear of seizure, even if the source is not immediately clear. However, this does not represent a cap on ownership, but rather a threshold for non-seizure during investigations. If individuals possess gold beyond these limits, they must satisfactorily explain its source, such as through inheritance or prior disclosed income, to avoid it being classified as an unexplained investment and taxed accordingly.

The finance ministry further clarified that there are no restrictions on gold ownership as long as the source can be substantiated. It is crucial for taxpayers to maintain adequate documentation to support their gold holdings, particularly in the context of income tax scrutiny. For those with total income exceeding Rs 1 crore in the fiscal year 2025-26, they must disclose their gold holdings under Schedule AL in their income tax returns.