If you’re ever looking to get into the world of investing your money, one of the first advice you get is – “have you tried investing in gold?” There’s plenty of logic behind this statement because gold is one investment that matures over time.

People generally buy gold for various reasons, such as wearing them on auspicious occasions or wearing ornamental jewellery. But, gold is also seen as a precious investment an individual can hold.

That’s why India’s homemakers hoard up their gold. So much so that India’s households remain the world’s largest gold consumers – with 25,000 tonnes stored, with its monetary equivalent being 40% of the nation’s GDP in FY 2019.

India’s demand for gold rose by 5.2% from January to March in 2019, against a marginally small fall in the preceding quarter. However, WGC data shows that India’s demand still trails the 7% global rise. In the case of an investment, gold doesn’t just stand as an option for jewellery but also includes gold bars, gold coins, and other forms.

If you’re looking to invest in gold but are unsure, we’ve cleared it up for you – everything from whether gold is a safe investment to the precautions you need to take while investing in this alluring metal and the permissible limits of keeping it in your premises.

Let’s get started!

When purchasing gold, you need to store your tax invoices for the purchase – whether it is jewellery or bullion. Tax experts claim that you don’t have to explain your gold investment when you make it and have been specified by the Central Board of Direct Taxes (CBDT) in their press release, dated December 1, 2016. If the source of investment or inheritance can be explained, there’s no limit on the amount of holding jewellery.

It is essential, however, that the income of the assessee is in line with the gold quantity being held. Provide the necessary proof, so you aren’t subject to scrutiny from the Income Tax (IT) department. If you’re not able to explain the same, the assessing officer holds the authority to confiscate the amount of gold that is held.

So, What is the Amount of Gold That is Acceptable at Home?

The CBDT clarified the prescribed gold quantity that is considered allowable. Within the limit set by them, gold won’t be seized in the event of an assessment of the premises. The breakdown is –

  • Married women can have up to 500 grams of gold
  • Unmarried women can have up to 250 grams of gold
  • Men can have up to 100 grams of gold.

Higher quantities than these can also be unseized on the behest of the assessing officer and his discretion. The factors influencing them can be family traditions and customs, which are considered for such events. The limits prescribed apply to jewellery that’s held by family members. In case the jewellery found belongs to another person, it can be seized and confiscated.

What Happens if You Keep Gold Beyond the Permitted Limit?

If you can provide the source of your jewellery acquisition, there is no limit to the amount of holdings and ornaments you can keep. If an individual keeps gold beyond the limits prescribed, they will have to explain the income source during the assessment.

In case of an excess holding, the source of income needs to be considered for the same. The proof of investment will help establish the investment source against the IT return of the individual being assessed.

Apart from the invoices, the other forms of proof are a little tricky. Suppose a gift or an inheritance, details such as receipts or gift deeds with the name of the initial owner might be needed. If you can produce a family deed or a will, stating the transfer of such items too, it will be accepted.

The government’s efforts to curb these “non-essential imports” control its overall impact on the current deficits on the account and the trade sector. It exerts a larger pressure on the value of rupee since it attracts a custom duty too. A 10% impact means that any plans to raise the value automatically facilitate smuggling and discourages imports of any kind.

Thus, these are the rules set up by the government on the amount of gold you can store at home. As long as you furnish the right documents, you will be able to store it without worry.

If you want to get more details on how you can invest in gold, head over to FinGurus for a professional consultation.