The Central Board of Direct Taxes (CBDT) has set limits on the amount of physical gold individuals in India can possess.

amount of physical gold individuals in India can possess

The big question is, ‘how much gold can I keep at home?’ and we have the latest information to help clear things up.

Everyone knows gold is a valuable metal often used for jewellery and investment purposes. In India, people usually purchase physical gold during Dhanteras and weddings. In addition, many also store gold coins at home. Therefore, understanding the rules and taxes applicable for storing various forms of gold and knowing how much gold you can legally keep in the house is essential.

According to the Central Board of Direct Taxes (CBDT), gold acquired through reported or exempt income, such as agriculture, household savings, or inheritance, is not taxable. Therefore, an officer cannot seize it during a search if you keep a fixed amount of such gold at home. Let's explore this topic further.

Physical Gold - The Most Precious Yellow Metal 

As per the limits set by the Central Board of Direct Taxes (CBDT), a married woman can possess up to 500 grams of physical gold in the form of jewellery and ornaments, and an unmarried woman can have up to 250 grams of gold. At the same time, men can keep 100 grams of gold with them.

If you bought gold legally as a source of income, you could keep any amount. There is no fixed limit for this. If you do not sell this gold, you will not be taxed. 

Read: 7 Tax Strategies for 2023

Digital Gold

Digital gold, purchased and held electronically, has become a popular investment option in India. It is bought and sold through various digital platforms, and the amount of digital gold one can hold is not subject to any specific limit. However, purchasing this digital gold is subject to certain limitations and regulations.

According to CBDT guidelines, an individual can purchase digital gold worth up to Rs. 2 lakh daily. This limit applies to the value of digital gold purchased in single or multiple daily transactions. 

For instance, if someone purchases Rs. 1 lakh in the morning and another Rs. 1 lakh in the evening of the same day, they reach the daily limit of Rs. 2 lakh.

Note: this daily purchase limit of Rs. 2 lakh is per each individual

Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold, available for purchase through the Reserve Bank of India (RBI). They offer a safe and convenient way to invest in gold.

The maximum amount of SGBs that can be held at home by individuals in India is limited to four kgs per year, including individual and joint holdings bought from primary and secondary markets. SGBs must be in demat form, and physical certificates are not issued. 

Note - there's no limit on the number of SGBs you can buy in a financial year. However, there is a limit on the amount held in the form of SGBs, such as 4kg/per individual and 20kg for trusts. 

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Investors are attracted to SGBs because of their annual GST exemption and a fixed interest rate of 2.5%. This is added to taxable income and taxed based on the applicable slab rate. Holding SGBs for over eight years results in tax-exempt profits, making them a most attractive long-term investment option.

Gold ETFs and Gold Mutual Funds

The tax implications of holding gold ETFs and mutual funds are the same as that of physical gold. Long-term capital gains tax (LTCG) is applicable when you own these funds for over three years, and the rate is 20% plus 4% cess. For investments held for less than three years, the gains are added to the individual's taxable income and taxed as per their income tax slab.

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