In India Gold in the form of biscuits, bonds, jewellery has a lot of importance from the point of investments or for the beauty of women. But before buying any of them, you always think whether it is in the ambit of Income Tax or not. You might be afraid that you could receive the Income Tax Notice if you hold more gold. Also there are some people who have a myth that the gold that they can hold at home, is beyond the jurisdiction of the Income Tax Department and Enforcement Directorate (ED). But, people are not aware that they cannot wash-off their hands by just saying it’s woman’s personal wealth or asset.
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Source of gold investment
- The most important thing while buying gold is to take and retain tax invoices for the purchase either it is jewellery or bullion.
- On 1st December 2016, The Central Board of Direct Taxes (CBDT) has stated in its press release that there is no limit on holding gold provided that the source of investment can be explained. However, it is necessary that income of taxpayer is in line with the amount of gold held.
- If the taxpayer provides the required proof for such possession then it will help in avoiding scrutiny from the income tax department, otherwise the assessing officer also have the authority to confiscate the gold held.
Maximum quantity of gold that can be acceptable by IT Department
- The Central Board of Direct Taxes (CBDT) has clarified the maximum quantity of gold that can hold. If gold is within the prescribed limit then it will not be seized even at the time of search at the assessee’s premises.
- As per the Income Tax Act, a married woman is allowed to hold 500g of gold. An unmarried woman is allowed to hold 250g of gold. A man is allowed to hold 100g of gold.
- Even a higher amount of gold may be left unseized based on the assessing officer’s discretion. Factors such as family customs and traditions can be considered for such a decision.
- It is necessary to understand that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person then the same can be seized and confiscated.
What kind of proof is valid for Gold possession?
- Having a valid proof of investment will help the assessee in establishing the source of the investment as against your income tax return. Now the question arises that what kind of proof is required in case of inheritance and gifts. So, in the case of inheritance or gift, valid proof will be a receipt in the name of initial owner of the item or you can also submit a family settlement deed, will, a gift deed stating the transfer of such commodity to assessee. On the other hand, if there’s no such document or receipt available then the officer will analyse your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not.
What are the precautions required before buying Gold?
- The above mentioned limits are applicable to individual taxpayers.
- If there is a single locker having jewels from multiple families then the limit will be an aggregate of each individual taxpayer. In this case, it is advisable to open joint locker accounts with the names of the taxpayers from each family, by this you can avoid confusion.
What is the tax calculation under section 115BBE?
| 1. | Tax on income u/s 115BBE | 60% |
| 2. | Surcharge
(This is further subject to normal cess and higher education cess as applicable) |
25% of such tax |
| 3. | Penalty U/S 271AAC
(In the case where income not included in a return filed u/s 139 ) |
10% of such tax |
Conclusion:
Buying Gold or keeping it is the much hot topics in India as it is very common in women in India. People should learn before buying that they do not fall into any trap after purchasing gold over an excessive limit. You should have proper proofs and identifications for proving that the same has been purchased out of tax paid money. In case you have any confusion you may also speak to tax experts, they will guide you better on this aspect.
