The craze of people in India about gold is evident. However, in the last few years, many investment options have come up in gold. These include Gold ETFs, Sovereign Gold Bonds, Gold Mutual Funds of mutual funds. Despite this, the desire to invest in physical gold has not decreased.
Indian emotional relationship with Gold
People have a centuries-old association with gold. It is considered auspicious to buy gold on occasions like Diwali and Dhanteras. There is a trend of giving gold to the bride even in marriage. Many people also buy gold jewelery for investment purposes. The question is, how much gold can a person keep with him?
What is the Gold Control Act, 1968?
The Gold Control Act, 1968 was first applicable in India. Under this, people were not allowed to keep gold more than a limit. However, this act was abolished in June 1990. Again, the government did not introduce any law that sets the limit for holding gold. Therefore, there is currently no legal limit on the amount of gold an individual or family can hold.
What is the direction given by CBDT?
However, gold jewelery or other forms have been found in income tax raids. The reason for this is that there has been an old tradition of keeping gold in homes in the country. Therefore, it is not right to doubt about gold jewelery or any other form. Keeping this in mind, the Central Board of Direct Taxes (CBDT) had issued a directive in 1994.
This instruction of CBDT was for Income Tax Officers. It said that gold jewelery or gold in any other form should not be confiscated during the raids. For this, different limits of quantity were fixed for the members of the family.
What is the limit in the instructions of CBDT?
According to this, if a married woman finds gold jewelery up to 500 grams, then the tax authorities will not seize it. If an unmarried woman finds gold jewelery up to 250 grams, it will not be confiscated. Gold jewelery up to 100 grams of a married or unmarried male member shall not be confiscated.
It should be noted that this quantity limit is for one member of the family. This means if there are two married female members in the family then the total limit will increase from 500 grams to one kilogram. The purpose of this CBDT directive was to keep the seizure of every gold jewelery out of the process of confiscation. Confiscation of every gold jewelery increases the number of disputes.
It is important to understand that this CBDT directive does not confer any legal right to hold gold jewellery. It also does not set legal limits. Its purpose is to provide relief to taxpayers from confiscation of only gold jewelery during raids. It is also important to understand that these instructions apply only to family jewelry or other jewelry.
If gold jewelery is found with any member from outside the family, it can be confiscated by the tax authorities.