How much gold jewellery can you keep at home?

Dhanteras and Diwali are festivals where people purchase gold jewellery, coins, bars, and other items. Some individuals buy small quantities, while others acquire larger amounts. However, when purchasing significant quantities of a precious metal like gold, two questions may arise: Is there a limit to the amount of gold one can keep at home? Can the Income Tax Department confiscate gold if it is held in large quantities?

According to Chartered accountant Chintan Ghelani, a partner at direct tax firm N.A. Shah Associates LLP, there are no formal limits on how much gold and silver an individual can keep in their residence. However, there is a CBDT internal guideline for income tax officers regarding the maximum quantity of gold that should not be seized during an income tax search or raid operation.

If an individual possesses more gold or silver than the prescribed guidelines, they must provide a satisfactory explanation for its source, such as inheritance, purchase bill, or any other legitimate means. In several cases presented to various ITAT benches, individuals who could explain the origin of their jewellery and gold items were ordered by the Income Tax Department to return the items to the taxpayer. Therefore, explaining the source of the gold is crucial.

Ghelani clarifies that there is no prescribed maximum quantity of gold that an individual can legally own or keep at home, provided they can explain the source of acquisition, such as disclosed income, inheritance, or gifts. The Income Tax Department's guideline primarily focuses on the non-seizure of jewellery and ornaments during an income-tax search.

The CBDT guidelines apply to jewelry and ornaments, not unexplained gold bars, coins, or bullion. These guidelines suggest that gold jewellery and ornaments up to the following quantities would generally not be seized: 500 grams for married women, 250 grams for unmarried women, and 100 grams for male family members, whether married or unmarried.

This distinction is essential, as a married woman is not restricted from owning more than 500 grams of jewellery. If the gold is acquired from disclosed income, inheritance, or gifts, and falls within the specified limits, it is typically not subject to seizure during income tax operations.