How much gold can you keep at home? Storage Limit & Tax Rules (2024)

Owning gold in India is a cherished tradition, deeply rooted in the cultural and economic fabric of the country. Gold is not only valued for its beauty and status but also for its role as a secure investment.

Key Takeaways

• According to prevailing regulations, the permissible limits for personal gold holdings differ based on marital status.
• Married women can possess up to 500 grams of gold, while unmarried women have a limit of 250 grams.
• In contrast, the limit for men is restricted to 100 grams of gold, reflecting variations in statutory guidelines concerning individual gold ownership.
• It is essential for individuals to stay informed about such limits and adhere to them in compliance with applicable laws.

Understanding gold ownership’s legalities can be challenging due to various regulations and tax implications. However, it is important to know the details of the tax laws pertaining to gold ownership to avoid any legal troubles.

What is the Gold Storage Limit Per Person in India?

India has no legal gold limit for how much gold you keep at home, be it jewelry, coins, or bars. However, there are regulations regarding the amount of gold you can possess without providing proof of income during a tax assessment.

The Central Board of Direct Taxes (CBDT) outlines these gold buying limits in India, which vary based physically possessed women can hold up to 500 grams of gold, unmarried women have a limit of 250 grams, and married or unmarried men are allowed 100 grams. It is important to remember that these are limits for unaccounted gold. If you can demonstrate legitimate income sources for your gold purchases, you should not face any tax issues on how much gold can be kept at home, regardless of the quantity.

Limits and Income Tax Rules on Storage of Different Types of Gold

In India, there is no absolute restriction on the amount of gold you can hold, but tax regulations play a significant role. But how much gold can you keep at home?

Physical Gold

Physical gold refers to the tangible form of this precious metal, commonly available in coins, bars, or jewelry. Unlike paper or digital representations of wealth, physical gold provides individuals with a concrete and enduring asset valued for its beauty, rarity, and intrinsic worth throughout human history.

One of physical gold’s distinctive qualities is its historical significance. Across civilizations and centuries, gold has symbolized wealth, power, and luxury. It has been used as currency, adornment, and a store of value. Even in the modern era, physical gold maintains its allure, connecting investors to this precious metal’s enduring legacy.

Digital Gold

Digital gold is an investment that allows individuals to own and trade gold in electronic or digital format, eliminating the need to possess the precious metal physically. This innovative financial instrument leverages technology to provide investors a convenient and accessible way to participate in the gold market.

Sovereign Gold Bond (SGB)

Individuals can only invest a maximum of 4 kg per year in SGB. The holdings used as collateral by banks and other financial institutions will not be included in the investment ceiling.

The purchase of sovereign gold bonds (SGBs) does not involve outward costs, as GST is not required. An SGB receives interest at 2.5% annually, added to taxable income and assessed according to the applicable slab. However, after eight years, SGB profits are tax-free.

Gold ETFs And Mutual Funds

LTCG applies to mutual funds and gold ETFs when held for more than three years. For investments made for less than three years, the rate is the same (20% plus 4% cess), and the gains are applied to your taxable income and taxed according to your IT slab.

The expenses, minimum and maximum limitations, and tenure times of various gold investment products vary. Therefore, before investing, exercise due diligence.

How is Gold Taxed?

Gold, often hailed as a symbol of wealth and prosperity, is significant in the financial world. As individuals buy, sell, and exchange gold for various purposes, understanding how gold is taxed is crucial for making informed financial decisions.

Goods and Service Tax (GST) on Gold Purchases

The Goods and Service Tax (GST) is applied at 3% on acquiring gold and 5% on the associated making charges. In the case of exchanging gold items such as bars or coins for new jewelry, no additional GST is imposed up to the weight equivalent to the exchanged gold (bars or coins). GST only applies to the value exceeding the weight of the exchanged gold.

It is important to note that no GST is levied on the outright sale of gold.

Income Tax on Gold

Gifts: Jewelry, Bullion, Gold ETFs, and Gold MFs

Receiving gold in the form of jewelry, bullion, Gold Exchange-Traded Funds (ETFs), or Gold Mutual Funds (MFs) as a gift becomes taxable if the aggregate market value of the received gold exceeds ₹50,000. The taxation is categorized under the ‘Income from other sources’ and is subject to applicable slab rates based on your income bracket.

Nevertheless, certain exemptions from taxation are provided by the Act in specific circ*mstances:

• If the total value of gifts received within a year is up to ₹50,000.
• Gifts received from specified relatives, including:
• Spouse
• Brother or sister of you or your spouse
• Lineal ascendant or descendant of you or your spouse (e.g., Children, parents, grandparents, etc.)
• Gifts received on the occasion of your marriage from friends or relatives
• Any asset received as inheritance under a will or any law of succession applicable to you

Physical and Digital Gold

A short-term capital gains tax will be assessed if you sell the physical gold within three years of purchasing it; if you sell it beyond that time, a long-term capital gains tax will be assessed. The short-term capital gains will be taxed at the income tax slab rate and added to the total taxable income. Meanwhile, the cost of purchasing digital gold has no upper limit. However, you can only spend up to ₹2 Lakh on gold daily.

Long-Term Capital Gains Tax (LTCG) for physical and digital gold is payable at a 20% + cess and fee rate when selling digital gold after three years. Returns on digital gold, however, are not immediately taxable if kept for less than three years.

How to Save Tax on LTCG Arising on the Sale of Gold?

Selling gold can be profitable but may incur capital gains tax. Here are some ways to potentially save on Long-Term Capital Gains (LTCG) tax from selling gold in India:

• Invest in Qualifying Bonds: Within six months of selling your gold, you can invest the capital gains in specific bonds like Capital Gains Bonds (Section 54EC) issued by government agencies. These bonds have a lock-in period of 3 years, and the invested amount is exempt from LTCG tax.
• Invest in a New Residential Property: Under Section 54F of the Income Tax Act, you can reinvest the capital gains from gold into a new residential property within one year before or two years after the sale. In some cases, using the proceeds to construct a new house within three years of sale can also qualify for exemption.
• Offset Capital Gains with Losses: If you have capital losses from other investments like stocks or mutual funds, you can use them to offset the capital gains from selling gold. This reduces your overall taxable capital gain.
• Sovereign Gold Bonds (SGBs): Consider investing in SGBs issued by the government. These bonds are denominated in grams of gold and offer capital gains tax exemption at maturity if held till redemption.

Necessary Precautions to Keep in Mind

When it comes to gold, a little foresight goes a long way. Here are some essential precautions to keep in mind:

• Secure Storage: Gold is a valuable target for theft. Invest in a secure locker at a bank or a reputable safety deposit box facility.
• Documentation: Maintain proper records of your gold purchases, including receipts, bills, and certificates. This documentation is crucial for insurance claims and tax purposes.
• Insurance: Consider insuring your gold for its full value. This protects you from financial loss in theft, fire, or damage.
• Physical Security: For gold jewelry at home, use a sturdy safe bolted to the floor or wall.

Wrapping Up

Owning gold at home is a common practice, and while there are no strict limits on jewelry, there are guidelines for gold coins and bars. Understanding the income tax rules related to gold ownership is crucial to ensure compliance and transparency in financial matters. It is advisable to stay updated on any regulation changes and consult with financial experts for the most accurate and current information regarding gold ownership and income tax implications.

The general public has always been satisfied when investing in gold because it is precious. Different gold investments vary in expenses, tenure times, and minimum and maximum limitations. Therefore, it becomes essential to conduct thorough research and analysis before making the decision to invest in gold.

FAQs on how much gold is allowed in India

- A Consumer Education Initiative series by Kotak Life