Indian’s love for gold is known. But make sure you buy all your gold from tax-paid income.

Since last November the government has been on a drive to unearth black money, and it makes sense to know the law of land with respect to the holdings in gold of individuals.

The Central Board of Direct Taxes clarified the provisions in the Income Tax Act with respect to gold jewellery through a press release in December last year. It stated that “there is no limit on holding of gold jewellery or ornaments by anybody provided it is acquired from explained sources of income including inheritance. Jewellery and ornaments to the extent of 500 gm for married lady, 250 gm for unmarried lady and 100 gm for male member will not be seized, even if prima facie, it does not seem to be matching with the income record of the assessee.”

The law also provides some leeway to the search officer, where he may choose not to confiscate gold jewellery exceeding the specified limits, depending on the customs and traditions of the family to which the individual belongs, it added.

The gold you inherited from your mother or your grandmother will also not put you into problem, say tax experts.

But how does one prove that the gold is inherited? Tapati Ghose, Partner, Deloitte Haskins & Sells, says, “wealth tax return(s) until 2014-15 for the inherited gold, a will which states that the gold is inherited or a gift deed if the same was executed or even photographs of the jewellery worn by the ancestors and in case of remade jewellery, copy of the receipts issued by the goldsmith or the jeweller,” are some ways.

However, if it is your gold , you should be able to shows the bills, if the search officer asks for it.

You need to also note that if your taxable income is in excess of ₹50 lakh, while filing tax return you need to disclose all assets, including gold.

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