Gold Restrictions – How much gold you can hold now?

Gold Restrictions - How much gold you can hold now in 2016Gold Restrictions – How much gold you can hold now?

On Thursday, there were several rumors and speculations indicating that Govt. of India has banned gold or put several restrictions to Individuals for holding gold. The finance ministry has clarified several facts about gold restrictions. Media has been showing horrible reports on gold restrictions entire day. Are there any restrictions on how much gold you can hold now? What is that CBDT has clarified about gold restrictions in India? Let me put some thoughts about gold restrictions, which people are talking about now.

About Gold consumption

India is the second largest gold buyer in the world. Indians love gold. Every year, we are importing thousands of tonnes of gold. Govt. of India has been making several attempts to reduce such gold imports. It introduced schemes like sovereign gold bond scheme. However after recent ban on high value currency, black money started flowing into physical gold. Couple of days back, Govt. of India has amended Income Tax Laws to address this issue.

Also Read: Should you invest in Gold Mutual Funds now in 2016

Gold Restrictions – How much gold you can hold now?

Govt. of India has announced certain guidelines recently through amendments in IT Act, 2016. While a lot of news has been floating in various television channels, here are some of the facts about gold restrictions and the quantity of gold one can hold now.

Yes, now you cannot hold the gold the way you want. Am I sounding like any other media / television channel . But wait, read the entire story.

The Income Tax Amendment Act would not apply for jewelry and gold purchased out of disclosed income or exempted income or reasonable household savings.

IT amendment Act would not apply for ancestral jewelry and gold.

The tax exemption is available for domestic jewelry at home and NO Seizure up to certain limit as prescribed in tax exemptions.

Ministry of Finance clarified that Gold and jewelry up to 500 grams per married lady, 250 grams to unmarried lady and 100 grams per male is exempted. These would be allowed as normal gold holdings and would be exempted from any Income Tax searches arising in future.

Central Board of Direct Taxes (CBDT) clarifies that beside above relaxation legitimate holding of jewelry up to any extent is fully protected.

What does this mean for you as an investor?

Govt. of India has clarified earlier that there would not be any ban or restriction on gold holdings by individuals. However the recent IT amendment act passed couple of days back (to restrict black money flow into physical gold), has been taken in a different view by the media. If you are a regular tax payer and purchased physical gold out of the disclosed income, you need not worry about it. It is immaterial how much gold you are holding as you purchased them from your net income after tax. Even for individuals where there is no taxable income, but you have purchased gold within the limits prescribed above, there would not be any questions from Income Tax authorities during IT searches. Hence honest tax payers need not worry about it. You should be able to clarify to Income Tax authorities in case of any IT search on how you were able to purchase such gold.

Also Read: Best Performing SIP Mutual Funds to invest in 2017

Do such gold restrictions apply for investments done on gold mutual funds too?

Currently Govt. of India is trying to avoid any black money being pumped into purchasing physical gold. If you are making any transactions like investing in gold mutual funds through online, it would not fall under your limits prescribed above as you are not purchasing gold mutual funds in grams. Also, you are buying mutual funds from your savings after income tax is paid. Hence, I feel, it is safe to invest in gold mutual funds unless any further restriction comes on such gold funds too.

Conclusion: Yes, I do agree, there is some panic after ban of high denomination currency and some of the restrictions that are coming in the last 3 weeks. However, there is pain for every gain. If you are honest taxpayer, be cool, try to make online payments, keep some ready cash and keep going for the next couple of quarters.

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Gold Restrictions – How much gold you can hold now

Suresh KP


  1. hi suresh
    could you please write an article about what will be the intrest rates after demonetisation ,what about the future of ppf, nps such?

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