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While buying gold, it is necessary that you take and retain your tax invoices for the purchase, be it jewellery or bullion. According to tax experts, you do not have to worry if you can explain the source of investment in gold. The Central Board of Direct Taxes (CBDT) has specified in its press release, dated 1 December, 2016 that there is no limit on holding gold jewellery provided that the source of investment or inheritance can be explained.
However, it is essential that income of the assessee is in line with the quantity of gold held. Providing necessary proof for such possession will help in avoiding scrutiny from the income tax department. Otherwise, the assessing officer also holds the authority to confiscate the gold held.
CBDT has clarified the prescribed quantity of gold considered allowable. Gold within this limit will not be seized even at the time of search at the assessee’s premises.
Even a higher quantity of gold may be left unseized based on the assessing officer’s discretion. Factors such as family customs and traditions can be considered for such a decision.
It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated.
Proof of investment will help you in establishing the source of the investment as against your income tax return. Apart from the tax invoices that you would keep, you may wonder what kind of proof is necessary in case of inheritance and gifts.
In the case of inheritance or gift, it will be great if you can provide a receipt in the name of the initial owner of the item. Alternatively, you can also submit a family settlement deed, will, or a gift deed stating the transfer of such commodity to you.
On the other hand, if there is no such document available, the officer will analyse your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not.
The quantity mentioned above are applicable to individual taxpayers. When it comes to a single locker having jewels from multiple families, the limit will be an aggregate of each individual taxpayer. In this case, it is recommended to open joint locker accounts with the names of the taxpayers from each family. This way you can avoid confusion.