Income Tax: In India, gold has long been more than just a symbol of wealth—it is both a traditional asset and an investment. Many households buy and store gold for both ornamental purposes and financial security during challenging times. While it is common to keep gold at home, there are specific rules on how much gold one can legally store without facing issues under the Income Tax Act.
Limits on Storing Gold at Home
The Central Board of Direct Taxes (CBDT) has set limits on how much gold can be stored at home. According to the Income Tax Act, married women can hold up to 500 grams of gold, while unmarried women are permitted to keep up to 250 grams. For men, the gold holding limit is capped at 100 grams. Exceeding these limits is allowed only if proof of purchase, such as receipts, can be provided. Failing to provide such documentation may lead to inquiries by tax authorities.
No Tax on Inherited Gold
Gold inherited or purchased from declared income is exempt from tax. As long as the gold is within the prescribed limit, the government will not confiscate it. If the gold exceeds the limit, the owner must show valid proof of purchase to avoid penalties.
Tax on Selling Gold
While there is no tax on simply owning gold, selling it comes with tax implications. If gold is sold after holding it for more than three years, the profit made is subject to a Long Term Capital Gains (LTCG) tax of 20% after indexation. This tax applies to all forms of gold, including jewelry.
Tax on Sovereign Gold Bonds (SGBs)
For those investing in Sovereign Gold Bonds (SGBs), selling them within three years will result in the profits being added to their taxable income, according to the individual’s tax slab. However, if the SGBs are sold after three years, a 20% LTCG tax with indexation or 10% without indexation is applicable. Notably, if the bonds are held until maturity, no tax is levied on the profits made.
As gold remains a valuable asset in Indian households, it is crucial to understand these legal limits and tax implications to ensure compliance with the law while making the most of gold investments.
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