In this guide
With the Income-tax Act, 2025 applicable from 1 April 2026, taxpayers should understand the rules relating to gold, jewellery, gifts, capital gains and unexplained gold.
Travelling with jewellery? Read the customs and export-certificate guide for carrying gold abroad. For airport purchases, also see when GST applies after immigration.
A common question is whether there is any legal limit on the amount of gold that can be kept at home. Another important issue is whether tax is payable when gold or jewellery is sold.
The practical position depends on whether the gold has an explained source, how it was acquired, how long it was held and whether proper supporting documents are available.
How Much Gold Can You Legally Keep at Home in India?
There is no fixed maximum legal limit on the amount of gold or jewellery a person may own if it was acquired from explained and lawful sources.
The quantities commonly quoted online—500 grams, 250 grams and 100 grams—are not ownership limits. They come from CBDT search-and-seizure guidance concerning jewellery and ornaments that should generally not be seized during an income-tax search:
| Family member | Jewellery generally not seized |
|---|---|
| Married woman | 500 grams |
| Unmarried woman | 250 grams |
| Male member | 100 grams |
These figures should not be treated as an automatic exemption from explaining the source or as permission to hold unexplained gold. They are administrative non-seizure guidelines for jewellery and ornaments. The authorised officer may also decide not to seize a higher quantity after considering family customs, status and surrounding circumstances.
The Government has officially clarified that there is no limit on holding gold jewellery acquired from explained sources.
Explained Gold vs Unexplained Gold
The central issue is whether the taxpayer can establish the source and history of the gold. A person may hold more than the quantities listed above where the acquisition is supported by lawful and credible evidence.
Useful supporting records include:
- Purchase invoices from the jeweller;
- Bank statements, card records and other payment evidence;
- Past income-tax returns showing sufficient disclosed income;
- Gift deeds or contemporaneous evidence where jewellery was received as a gift;
- Will, succession or family-settlement documents for inherited jewellery;
- Marriage gift lists and other contemporaneous evidence; and
- A valuation report where relevant for very old jewellery.
The absence of a decades-old bill does not automatically make jewellery unexplained, but the taxpayer should be able to support the acquisition through surrounding evidence, family history, disclosed income and other reliable records.
Is Tax Payable When You Sell Gold or Jewellery?
Yes. Gold and jewellery are generally capital assets, and profit arising on their sale or transfer can be taxable as capital gains.
| Holding period for physical gold or jewellery | Nature of gain | General tax treatment |
|---|---|---|
| More than 24 months | Long-term capital gain | 12.5% without indexation |
| 24 months or less | Short-term capital gain | Applicable normal/slab rate |
The above treatment applies to ordinary physical gold and jewellery under the current framework. Gold ETFs, gold mutual funds and Sovereign Gold Bonds can follow different holding-period and tax rules.
For those differences, read TaxClear’s detailed guide on tax on physical gold, Gold ETFs, mutual funds and Sovereign Gold Bonds.
For professional assistance with reporting capital gains, visit TaxClear ITR Filing Services.
Is Remaking Old Gold Into New Jewellery Taxable?
If the same owner merely gives existing gold for melting or remaking on a job-work basis, retains ownership of the metal and pays only making or service charges, there is ordinarily no sale of that gold merely because its design or form changes.
However, an exchange transaction is different. If a jeweller purchases or takes ownership of the old gold and adjusts its value against the price of new jewellery, the old gold may be regarded as transferred. Capital-gains consequences should therefore be examined on the facts and documents of the transaction.
Tax Treatment of Silver Utensils
Silver jewellery, bullion and silver held as an investment can be capital assets. Ordinary silver utensils held for the taxpayer’s personal use may fall within the personal-effects exclusion, depending on the facts.
This treatment should not be applied to silver held as stock-in-trade, for business purposes or as an investment. Jewellery is specifically treated differently from ordinary personal effects.
Tax on Gold Received as a Gift
The tax treatment depends on who gives the gold and the circumstances in which it is received.
Gold Gifted by Parents or Other Specified Relatives
Gold received from a parent or another specified relative is not taxed merely because it is received as a gift. Gifts received on the individual’s marriage and property received under a will or inheritance also have specific exemptions, subject to the statutory conditions.
If the recipient later sells the gifted gold, capital gains can arise. In general, the previous owner’s cost and eligible holding period are relevant in computing the recipient’s capital gain.
For example, if a father purchased gold for ₹2 lakh, gifted it to his daughter and she later sells it for ₹8 lakh, the starting gain before considering allowable expenditure and other applicable adjustments is ₹6 lakh. If it qualifies as a long-term asset, tax at 12.5% on ₹6 lakh would be ₹75,000, before surcharge and cess.
Gold Gifted by a Friend or Other Non-Relative
Jewellery and bullion are specified movable property for gift-tax purposes. If such property is received without consideration from non-relatives and its aggregate fair market value exceeds ₹50,000 under the applicable rule, the entire taxable fair market value—not merely the amount above ₹50,000—can be chargeable under income from other sources, unless a statutory exception applies.
An unmarried boyfriend or girlfriend is not treated as a spouse merely because they are in a relationship. The relative exemption applies only if the person falls within the statutory definition or another specific exemption applies.
The Income Tax Department’s official guidance explains the tax treatment of gifts and specified movable property.
Unexplained Gold and the Illustrative 99% Burden
Under the Income-tax Act, 2025, income covered by the unexplained-income provisions can be taxed under Section 195 at a basic rate of 30%.
Section 195 distinguishes amounts reflected by the taxpayer in the return from amounts subsequently determined by the Assessing Officer. Where AO-detected unexplained income falls within Section 195(1)(b), it is specifically included in the misreporting framework of Section 439. A misreporting penalty can be 200% of the tax payable on the misreported income.
| Situation | Illustrative effect |
|---|---|
| Income correctly reflected in the return under Section 195(1)(a) | About 39% where 30% tax, 25% surcharge on tax and 4% cess are assumed |
| AO-detected income under Section 195(1)(b), with 200% misreporting penalty | Can reach approximately 99% under the commonly discussed illustration |
| Earlier framework | Commonly illustrated at approximately 84% |
The 99% figure is an illustration, not an automatic flat tax rate. Actual liability depends on the taxpayer’s status, applicable surcharge, computation of tax payable, assessment findings, penalty proceedings and eligibility for any statutory immunity or settlement mechanism. A penalty requires the relevant legal conditions and proceedings; discovery of gold does not by itself make the 99% figure automatic.
For the complete calculation, read TaxClear’s guide to the 99% tax rule on unexplained income.
For professional assistance with an income-tax notice, unexplained asset or assessment proceeding, visit TaxClear Legal Services.
Documents You Should Keep for Gold and Jewellery
Purchase Bills
Keep the jeweller’s invoice and any hallmark or product details. Purchases should be traceable to explained funds.
Bank and Payment Records
Preserve bank statements, card records and other evidence showing how the jewellery was purchased.
Gift or Inheritance Documents
A gift deed, will, family settlement, marriage gift list or other contemporaneous evidence can help establish the source and history of the asset.
Previous Income-Tax Returns
Past returns and financial records can help demonstrate that the taxpayer or previous owner had sufficient disclosed income to acquire the jewellery.
Valuation Report for Very Old Gold
For very old jewellery, including assets acquired by the previous owner before 1 April 2001, a suitable valuation report may be relevant where the law permits fair market value as of 1 April 2001 to be considered for cost computation.
Frequently Asked Questions
Is there a maximum limit on how much gold I can keep at home?
No fixed maximum ownership limit applies to gold acquired from explained sources. The 500-gram, 250-gram and 100-gram figures are general non-seizure guidance for jewellery during a search, not ownership limits.
Can a married woman keep more than 500 grams of gold?
Yes. More than 500 grams may be held where its source is properly explained. The authorised officer may also consider family customs and other circumstances during a search.
Do the non-seizure limits cover gold bars and coins?
The commonly quoted CBDT guidance refers to gold jewellery and ornaments. It should not be presented as a blanket non-seizure limit for bullion, bars or coins.
Is selling gold taxable in 2026?
Yes. Profit from selling or transferring gold or jewellery can be taxable as capital gains.
What is the long-term capital-gains tax rate on physical gold?
Physical gold or jewellery held for more than 24 months is generally long-term, with tax at 12.5% without indexation under the current framework.
Is gold received from parents taxable as a gift?
Receipt from a parent is not taxed merely because it is a gift. Capital-gains tax may arise if the recipient later sells the gold.
Does changing old jewellery into a new design create tax?
Pure remaking while retaining ownership of the same gold is different from exchanging or selling old gold to a jeweller. An exchange involving transfer of ownership may have capital-gains consequences.
What documents should I keep?
Keep purchase invoices, payment records, gift or inheritance documents, previous tax returns and relevant valuation evidence.
Disclaimer: This article provides general information and does not constitute legal or tax advice. Gold transactions, gifts, capital gains, search proceedings and penalties depend on the facts and law applicable to each case.
