CBDT Clarification on Legal Gold Holding Limits for Income Tax Purposes

CBDT Clarification on Legal Gold Holding Limits for Income Tax Purposes

The Central Board of Direct Taxes (CBDT) has clarified the legally permissible limits for holding gold without seizure during income tax search operations, provided the holding aligns with reasonable household usage and wealth.

Permissible Limits for Gold Holding

The CBDT has established the following limits for the non-seizure of gold jewellery/ornaments during a search:

• Married Woman: Up to 500 grams (0.5 kg).
• Unmarried Woman: Up to 250 grams (0.25 kg).
• Man: Up to 100 grams (0.1 kg) per individual.

Key Condition for Non-Seizure

• No Further Evidence Required: If the gold holding of an individual falls within these specified limits, the Income Tax authorities cannot seize the jewellery, even if the person cannot produce specific documentation (like purchase bills) to substantiate the ownership. The reasonableness of the quantity is assumed.
• Holding Above the Limit: If the gold or jewelry held exceeds these limits, the individual must be able to satisfactorily explain the source of the excess gold and prove that it was acquired using taxed or explained income. If the source cannot be substantiated, the excess gold is liable for seizure and subsequent taxation.
• Source of Clarification: This clarification is based on an old instruction from the CBDT which acknowledges that reasonable amounts of gold ornaments often come from ancestral wealth or small gifts, making it difficult for taxpayers to produce proof of purchase for every item.