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How much gold can you keep at home? Limits and income tax rules explained

Along with keeping gold safe, it is essential to consider the laws that apply to a metal of such high value.

  • Jan 19, 2023

One valuable metal whose value has only increased over time is gold. In India, purchasing gold during a celebration is said to be lucky. Many of us love to have gold in our homes, whether it be coins or jewelry. In addition to ensuring that gold is stored safely, it is essential to consider the laws that apply to such a valuable metal.

Key takeaways

If a family consists of four people, a married woman, an unmarried woman, a married man, and a single man, the total amount of tax for gold that will not be confiscated is equal to.

Married Female 500 gm

Unmarried Female 250 gm

Married Male 100 gm

Unmarried Male 100 gm

The Central Board of Direct Taxes (CBDT) states that gold purchases made with revealed income, exempted revenue, such as agricultural income, “reasonable household savings,” or legally inherited money that was obtained from sources that could be explained, will not be taxed.

Additionally, according to the regulations, officials are prohibited from taking gold jewelry or ornaments from home during search operations if the quantity is below the established threshold.

The price of gold, a valuable yellow metal, has only increased over time. Purchasing gold is considered lucky, especially during festivals in India, and is therefore preferred over bonds, digital securities, and SGBs. We will never lose interest in the yellow metal, but do you know the restrictions and fees associated with storing gold in its different forms? People prefer to invest in tax for gold in addition to mutual funds, SIPs, and equities from the standpoint of investments.

Examine the restrictions, fees, and regulations governing the storage of different types of gold.

Physical gold

According to the CBDT’s most recent circular, men, regardless of marital status, are only allowed to possess 100 g of real gold in the form of jewelry and ornaments. Married women are allowed to possess 500 g, unmarried women 250 g, and men 500 g.
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 rules slab rate and added to the total taxable income. Long-term capital gains taxes are 20%, plus a 4% cess and an additional levy, if applicable. A 3% extra GST will be charged when buying actual gold.

Digital gold

Physical gold is rarely more profitable than investing in digital gold in terms of return on investment. Depending on where you invest, the only fees associated with buying digital gold are GST on the purchase price and a few additional small fees.

The cost of purchasing digital gold has no upper limit. However, you can only spend up to 2 lakh rupees on gold in a single day. When selling digital gold after three years, Long Term Capital Gains Tax (LTCG) is payable at a rate of 20% + cess and fee. Returns on digital gold, however, are not immediately taxable if kept for less than three years.

Sovereign Gold Bond (SGB)

Individuals are only allowed to 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.

There are no outward costs associated with purchasing sovereign gold bonds (SGBs), as you are not required to pay GST.
An SGB receives interest at a rate of 2.5 percent annually, which is added to taxable income and assessed according to the applicable slab. After eight years, SGB profits are, however, tax-free.

Gold ETFs and mutual funds

When held for more than three years, LTCG applies to mutual funds and gold ETFs. 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, be sure to exercise due diligence.

Wrapping Up

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

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