How Much Gold Can You Keep at Home? Limits and Income Tax Rules Explained

In India, you can own as much gold as you want if you can prove it is a legal purchase. However, tax authorities will not question up to 500g for married women, 250g for unmarried women, and 100g for men. Gold can be held in forms like jewelry, digital gold, Sovereign Gold Bonds, and Exchange Traded Funds (ETFs). Taxes include 3% GST on purchases and 20% on long-term gains. To save taxes, you can invest in specific bonds or property.

256,883 Views | Updated on: Apr 16, 2024

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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. Understanding how much gold is allowed in India 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?

There is no specific limit for how much gold can you keep at home legally in India if you can explain the source of income with which you bought it. Thus, if you have proof of income that can be shown to tax authorities, you can keep any amount of gold, be it jewelry, coins, or bars.

Further, if you buy gold with revealed income sources, agricultural income, legally inherited money, and a reasonable amount of household savings, it will not be taxed.

But what happens if you do not have any proof of income? You can still keep gold at home up to the following limits depending on your marital status and gender:

Married woman: 500 grams of gold
Unmarried woman: 250 grams of gold
Men (Married or Unmarried): 100 grams of gold

Thus, how much gold can a married woman have in India will differ from that of a married man. If your gold possessions are below the above limits, tax authorities cannot confiscate them even if you fail to show any proof.

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

We have discussed the broad guidelines related to how much gold is allowed in India. However, you can hold gold in various forms, especially since the rise of digitalization. Let us see how these different forms of gold ownership are regulated.

Physical Gold

As mentioned above, the permissible limit for how much gold can a person own in India depends on your gender and whether you are married or unmarried. Central Board of Direct Taxes (CBDT) has allowed men to store up to 100 grams of physical gold. On the other hand, unmarried women can keep 250 grams, and married women can hold 500 grams of gold.

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 with a convenient and accessible way to participate in the gold market. There is no legal limit on the amount of digital gold you can purchase, although daily transactions are capped at ₹2 lakhs. Additionally, there is no short-term capital gains tax if held for less than three years. However, a long-term capital gains tax of 20% applies to holdings beyond three years.

Sovereign Gold Bond (SGB)

When we are talking about how much gold is allowed in India, we cannot forget SGBs. 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 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 GST on gold is not 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, ETFs, or Mutual Funds 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 circumstances:

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

If you sell physical gold within three years of purchasing it, a Short-Term Capital Gains (STCG) tax will be assessed. The STCG will be taxed at the income tax slab rate and added to the total taxable income. If you sell physical or digital gold after three years, a long-term Capital Gains Tax will be payable at a 20% + Cess and fee rate. It is important to note here that the STCG tax is not levied in the case of digital gold.

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

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. You can also protect your gold investments by keeping clear records, choosing secure storage, and exploring diverse gold options like digital platforms and government bonds.

FAQs on how much gold is allowed in India

How much gold is legal to own in India?

In India, you can legally own any amount of gold if you can explain the source of income to the tax authorities. CBDT has specified a gold limit in India that can allow you to hold gold even without proper documentation. If you own gold beyond this limit, tax authorities might ask about the source of income:

Married women: 500 grams
Unmarried women: 250 grams
Men: 100 grams

How many grams of gold can I carry to India?

The amount of gold you can bring duty-free depends on gender and residency status. Here’s a breakdown:

Women and children over 2 years old: If you’ve lived abroad for over a year, you can bring up to 40 grams of gold jewelry without paying customs duty. The total value shouldn’t exceed ₹1,00,000.
Men: If you have been abroad for over a year, the duty-free limit for men is 20 grams of gold jewelry, with a maximum value of ₹50,000.

How much gold is allowed on an Indian flight?

The amount you can bring duty-free depends on your residency status and how long you have been abroad. Women and children over 2 years old (who have lived abroad for over a year) can bring up to 40 grams of gold jewelry, while men get 20 grams (both with value limits). Exceeding this or bringing coins/bars? Declare it and pay duty. There’s also a total 1 kg limit per person.

Can I buy more than ₹2 lakhs of gold?

Yes, you can buy more than ₹2 lakh worth of gold in India. However, there are a couple of things to consider:

Cash Limit: Indian law restricts cash transactions for a single purchase to ₹2 lakh rupees. So, if you are paying in cash, you must either break down your purchase or use another payment method.
PAN/Aadhaar for Large Purchases: For any gold purchase exceeding ₹2 lakh rupees, you must provide your PAN (tax ID) or Aadhaar card (national ID) details, regardless of your payment method. This helps the seller comply with tax regulations.

Can I keep 1 kg of gold at home?

In India, you can keep 1 kg of gold at home if its source is legitimate and provable. There’s no legal limit on the total amount of gold you can own, whether it’s jewelry, coins, or bars.

How Much Gold Can You Keep at Home? Limits and Income Tax Rules Explained

What is the Gold Storage Limit Per Person in India?

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

Physical Gold

Digital Gold

Sovereign Gold Bond (SGB)

Gold ETFs And Mutual Funds

How is Gold Taxed?

Goods and Service Tax (GST) on Gold Purchases

Income Tax on Gold

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

Physical and Digital Gold

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

Necessary Precautions to Keep in Mind

Wrapping Up

FAQs on how much gold is allowed in India

How much gold is legal to own in India?

How many grams of gold can I carry to India?

How much gold is allowed on an Indian flight?

Can I buy more than ₹2 lakhs of gold?

Can I keep 1 kg of gold at home?

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