Is there actually any restrict upto which one can personal gold?

Since Diwali is not far away many people purchase gold or gold jewelry. Many of you have to be questioning as to how a lot gold an individual can personal beneath the tax legal guidelines. In this text I suggest to clarify the perspective of the revenue tax division about you proudly owning gold. Let us talk about.

Is there actually any restrict upto which one can personal gold?

We in India had Gold Control Act, 1968, which prohibited residents from proudly owning gold past sure amount. However, this was abolished within the yr June 1990 and due to this fact presently there aren’t any restriction on the quantum of gold one can maintain in India.

What are the rules for revenue tax division to permit tax payers holding of gold 

Though there is no such thing as a restrict upto which one can personal gold jewelry or ornaments however with a view to keep away from disputes and guarantee uniformity, the Central Board of Direct Taxes (CBDT) had issued instruction for its officers on 11-05-1994 beneath which it had directed its officers to not seize any gold ornaments and jewelry upto a sure restrict based mostly on the gender of the individual and whether or not one is married or not of the relations of the individual raided

As per the instruction, revenue tax officers won’t seize gold ornaments as much as 500 grams for a married woman. The identical restrict is 250 grams for an single feminine. For male whether or not married or single the CBDT has prescribed a decrease restrict of 100 grams for every male member of the household. 

What are the implications of this round?

This round was issued to keep away from the instances of seizure of small amount of jewelry and to have a typical method within the mater. What this round says that revenue tax officers can’t seize gold jewelry as much as the required restrict even when the revenue of the household and standing within the society doesn’t warrant holding of a lot gold jewelry and ornaments.  

The CBDT instruction doesn’t specify any restrict as to how a lot gold in any type one can maintain however solely offers for aid to the tax payers from their jewelry being seized and brought away by the revenue tax officer throughout raids. Please word that this instruction covers solely the jewelry and decoration of the household.  So the jewelry claimed to belong to a non relations might be seized and brought away no matter the amount. 

As per this instruction the tax officers are clearly prohibited from seizing and taking away gold jewelry upto the required restrict beneath all of the circumstances even within the instances the place the supply for acquisition of the jewelry doesn’t get defined on the time or raid. However, in case you personal extra jewelry than specified within the instruction, the tax officers nonetheless can’t seize and take away the surplus jewelry in case you’ll be able to substantiate the supply of acquisition of the surplus amount.

Gold jewelry might be both self-acquired otherwise you might need acquired the identical by presents or inheritance. So in case of jewelry in extra of the required limits claimed to be inherited, you must be capable to show it with some documentary proof. The documentary proof might be within the type of a Will duly supported by wealth tax return or revenue tax returns of the individual deceased.  Likewise, for jewelry claimed to have been acquired as reward, you may furnish related concrete proof.  

Please word that the above round under no circumstances legalises possession of gold jewelry upto the boundaries talked about within the round. Though a number of excessive courts have held that possession of gold jewelry upto the required limits can’t be added to the revenue of the tax payers however I nonetheless really feel that although the revenue tax officers might not seize and depart the jewelry, after making file and entry of the gold jewelry, you should still have to clarify the supply such jewelry failing which the matter might land in litigation. 

So for the gold jewelry purchased by you out of your tax paid cash, you needn’t fear so long as you’ll be able to show how the jewelry was bought by you. It isn’t essential that the gold jewelry ought to have been bought by cheques or credit score/debit playing cards however there is no such thing as a drawback in case the identical has been bought by banking transaction however in case of money purchases there ought to be adequate money withdrawals to substantiate your declare that it was bought out of tax paid cash. I’d advise you to protect all of the invoices of such purchases. Even in instances the place such jewelry has been exchanged/transformed, please protect all of the invoices for labour fees together with the bill for authentic buy. 

The CBDT instruction applies solely to the gold jewelry and to not gold in another type or jewelry of different nature like diamond jewelry, valuable stones and many others. So the tax officers  can seize any gold cash,  gold bars and non-gold jewelry discovered throughout the raids even when the burden of  the identical is inside the specified limits  except you’ll be able to set up the acquisition of the identical. 

Though the wealth tax has been abolished lately previous to it abolition one was liable to file the wealth tax return for and upto 31-03-2015 in case the web taxable wealth exceeded Rs. 30 lakhs.  So in case your wealth tax return has been filed the place these gold jewelry and cash and bars have been included, the supply of such objects prima facie will get defined.

I’m certain the above dialogue will allow you to perceive the implications of the CBDT round on gold seizure on the time of revenue tax raids.

Balwant Jain is a tax and funding professional and might be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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