Gold holds a special place in Indian households.
It’s more than just metal; it’s tradition, pride, and security.
Gold is always a go-to purchase for celebrations, following traditions, weddings, and even for a secure investment plan.
From beautiful jewellery to gold coins, bars, and investment plans, almost every Indian family has some form of gold stored at home.
But have you ever thought about how much gold you can legally keep at home? Is there a limit?
Yes, there are gold holding limits in India.
A significant portion of Indian families are likely unaware of the specific limits on how much gold they can legally hold at home.
But you should be aware of these limits and rules.
After all, no one wants to accidentally cross a legal boundary while safeguarding their precious possessions.
So, keep reading to learn about legal gold ownership rules in India.
We will discuss all the income tax rules and regulations related to holding this precious yellow metal at home.
In 1968, India had the Gold Control Act, which limited how much gold people could keep.
But this rule was removed in June 1990.
Now, there is no official limit on how much gold you can have at home, whether it's jewellery, coins, or bars.
However, there are some rules about how much gold you can own without having to show proof of income during a tax check.
On 11th May 1994, the Central Board of Direct Taxes (CBDT) issued a circular to its officers. It stated the permissible limit for individuals to hold gold based on gender and marital status.
As we mentioned, there’s no limit on owning gold jewellery and ornaments, as long as it comes from a legal source of income and you can explain where it came from.
This includes gold inherited or gifts from the family.
However, there are certain limits on the amount of gold a person can keep at home without explaining the source of the gold such as:
Here’s a table showing the allowed gold limits per person in India:
| Category | Gold Limit |
| legal gold holding for unmarried women | 250 Grams |
| legal gold holding for unmarried men | 100 Grams |
| legal gold holding for married women | 500 Grams |
| legal gold holding for married men | 100 Grams |
For example, let’s say you have a family of four – husband, wife, unmarried son, and unmarried daughter.
The total amount of gold allowed in your house would be:
Total gold allowed: 950 grams (This limit includes both purchased and inherited gold).
It’s important to note that income tax officers cannot seize your gold jewellery during a raid if the quantity of gold within the prescribed limits, even without documents.
But if your family has 1250 grams of gold and the Income Tax department found out during the raid, you’ll need to show proper documentation for the extra 300 grams.
If the tax officer doesn’t accept your explanation, they will add the fair market value of your extra 300 grams to your income. You will then need to pay taxes on it with interest and penalties.
When buying gold in India, it’s important to keep your tax invoices, whether it’s bullion or jewellery. If you can explain where your gold investment came from, there’s no need to worry.
In 2016, the Central Board of Direct Taxes (CBDT) clarified in a press release that there’s no limit on holding gold jewellery and ornaments if you can show it’s from inheritance or a legal investment.
However, your Income Tax Return (ITR) must match the amount of gold you own. If it doesn’t, the tax officer has the authority to seize the gold you hold.
We’ve already covered the physical gold holding limits in India, so let’s move on to the income tax rules for holding physical gold.
Short-term Capital Gains Tax (STCG)
If you sell physical gold within three years, you’ll be taxed based on short-term capital gains. These gains are taxed according to your income tax slab rates.
Long-term Capital Gains Tax (LTCG)
If you sell physical gold after three years, you have to pay tax on long-term capital gains. The tax rate for this is 20%, plus a 4% cess and possibly a surcharge.
Digital gold is another type of gold people invest in. It’s often more profitable in terms of returns than physical gold. When buying digital gold, you only need to pay GST and a few small fees.
The good news is there’s no upper limit on digital gold Purchases.
Short-term Capital Gains Tax (STCG)
If you sell digital gold within three years of buying it, the profits will be considered short-term capital gains (STCG). These are taxed according to your income tax slab.
Long-term Capital Gains Tax (LTCG)
If you hold your digital gold for more than three years, the profits are considered long-term capital gains (LTCG). These gains are taxed at 20% after indexation benefits.
Indian citizens can invest in Sovereign Gold Bonds (SGB) up to a maximum of 4 kg of gold per year. However, gold used as collateral by banks or financial institutions doesn’t count toward this limit.
The interest rate on SGBs is 2.5% per year, which is added to your taxable income. But after eight years, the bond becomes tax-free.
No GST (Goods and Service Tax) is charged when purchasing SGBs, so there’s no extra cost.
Long-term Capital Gains Tax (LTCG)
If you sell the SGB after 3 years, it will be taxed as Long-Term Capital Gain (LTCG). The tax rate is 20%, plus you can get an indexation benefit.
Short-term Capital Gains Tax (STCG)
If you sell the SGB before 3 years, it will be taxed as Short-Term Capital Gain (STCG). The tax is based on your income tax slab rate.
Gold mutual funds don’t have a fixed limit on how much you can invest.
Short-term Capital Gains Tax (STCG)
If you sell the gold mutual fund before 24 months, the gains will be considered as STCG. These gains will be taxed according to the income tax slabs that apply to your income.
Long-term Capital Gains Tax (LTCG)
If you sell the gold mutual fund after 24 months, the gains will be treated as LTCG. LTCG will be taxed at 12.5% without any indexation benefit.
Gold ETFs also don’t have a fixed limit on how much you can invest.
Short-term Capital Gains Tax (STCG) If you sell a listed gold ETF before 12 months, the gains will be considered as STCG. These gains will be taxed based on your income tax slabs.
Long-term Capital Gains Tax (LTCG) If you sell the listed gold ETF after 12 months, the gains will be treated as LTCG. LTCG will be taxed at 12.5% without any indexation benefit.
If your gold jewellery or ornaments are seized, you’ll need to explain where the gold came from and show proof of how you bought it.
Some examples of proof include:
If you can’t explain the source of income or your explanation isn’t accepted, the seized gold will be taxed at 60% + 25% surcharge plus a 4% cess. This makes the total tax rate 78%. On top of that, a 10% penalty will be added.
Gold jewellery or bullion received as a gift is taxable if its total value exceeds ₹50,000. This Tax will be categorized as "Income from other sources", and the tax rate will depend on your income.
However, the Income Tax Act provides tax exemptions under certain conditions:
These gifts won’t be taxed if they fall under these categories.
To learn more about the tax rules on different types of gold, read All You Need to Know About Capital Gain Tax on Gold.
The gold limits mentioned earlier apply to individual taxpayers. If multiple families share a single locker, the limit will be the total of each individual taxpayer's limit.
Here’s what you can do.
This way, each person’s gold limit is counted separately.
It’s straightforward and helps you avoid confusion. Just make sure everyone’s name is listed in the locker account. That’s it!
While owning and investing in gold is common in India, some important precautions and details are not always discussed but should be kept in mind:
These steps can safeguard your gold, avoid unnecessary taxes, and keep you on the right side of the law.
Owning gold at home is common for Indian families. The key thing to remember is that there’s no limit on how much gold you can keep at home, as long as it's from a legitimate income source and you can explain where it came from.
Just be mindful of the allowed gold limits per person to avoid penalties. If you go beyond that limit, it’s important to keep proper records, or you may face penalties.
Gold is tempting, but always make sure you understand the tax rules when buying or inheriting it.
So, stay informed about the rules and regulations of gold holding limits in India.
A little knowledge can help you avoid trouble down the road.
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