If you want to be a modern-day King Midas, then keep your papers of gold acquisition (either purchase receipts or inheritance) handy, unless you want the tax authorities to seize it. There is a limit to the amount of gold you can keep at home without having any documentation. However, you have to pay tax whenever you sell your gold. Here are the details
Gold has always been considered a valuable asset in Indian homes, loved and admired for its lustre as well as a smart investment tool to be used during hard times. Many people receive gold in the form of jewellery during weddings or other family occasions, or buy them during auspicious dates, such as Akshay Tritiya and Dhanteras.
But besides being a symbol of wealth, gold is also seen as a safe investment that acts as a hedge during times of economic instability or volatility.
However, there are certain rules regarding the amount of gold one can hold without the necessary documentation and the taxes one has to pay while selling the precious metal.
According to the Central Board of Direct Taxes (CBDT), though people can store gold at home without giving evidence of its source, there are certain limits regarding its quantity.
Married Women: Up to 500 grams of gold.
Unmarried Women: Up to 250 grams of gold.
Men: Up to 100 grams of gold.
However, it should be noted that these limits apply specifically to gold held without any documentation regarding its acquisition. If one can provide legitimate proof of purchase, such as purchase receipts or inheritance documents, one can hold more gold than these specified limits.
Here are the taxation rules for gold in India.
Inherited Gold: If you inherit gold legally or buy it from any declared income or tax-exempt sources of income, such as agriculture, you won’t be taxed on your gold holdings. Also, if authorities find gold jewellery within the allowed limits, or with genuine proof of purchase beyond the prescribed limits, during any raid, they cannot take it away.
Possession Of Gold: There is no tax on gold possession at home.
Selling Gold: When you sell gold, you are required to pay tax on any profits earned on such sale. If you sell gold after holding it for more than three years, the profit so earned will be treated as long-term capital gains (LTCGs) and taxed at 20 per cent. However, this fixed rate does not apply when gold is sold within three of purchase. Short-term capital gains (STCG) on such sale is taxed in accordance with one’s income slab.
If sovereign gold bonds (SGB) are sold within three years of purchase, the profit is treated as part of the seller’s income and taxed based on his/her income tax slab. If sold after three years, the profit is taxed at either 20 per cent with adjustment for inflation or 10 per cent without it. However, if one holds SGBs till maturity, which is eight years, they do not have to pay any tax on the profits. Though SGBs are tax-exempt if held till maturity, the interest earned on them each year is added to one’s income and taxed at the applicable slab rate.