Gold Purchase Rules & Tax Compliance
The ₹2 Lakh Cash Rule (Section 269ST)
No person can receive ₹2 lakh or more in cash in a single transaction, or from the same person in a single day. The penalty is 100% of the cash amount — imposed on the receiver (the jeweller). This rule covers both buying and selling gold.
Don't try splitting: Paying ₹5L as three ₹1.67L cash payments across 3 days at the same jeweller for the same purchase is STILL a violation. The rule covers a single transaction/event, not just daily limits. Tax authorities track patterns.
PAN Requirements
If you don't have a PAN card, you must submit Form 60 (a declaration) to the jeweller.
What Your Invoice Must Show
A proper GST invoice from a jeweller should list all of these:
Jeweller's GSTIN number
Gold weight and purity (e.g., 10g, 22K/916)
Making charges as a separate line item
3% GST on gold value
5% GST on making charges
Hallmarking charge (₹45) and HUID
If your invoice shows a single bundled amount with only 3% GST — ask for an itemized bill. A bundled invoice hides making charges and wastage.
How Much Gold Can You Keep at Home?
CBDT safe harbor limits define gold that will not be seized during an IT search, even if the source is unexplained:
Above these limits, be prepared with purchase invoices, gift deeds, or inheritance documents. Gold from explained income, gifts, or inheritance can absolutely exceed these limits — documentation is key.
Inherited and Gifted Gold
Inheritance
Not taxable when received. Capital gains tax applies only when you sell. Your cost basis = original owner's purchase cost.
Gifts from relatives
Fully exempt, any amount. Relatives include spouse, parents, siblings, and in-laws.
Wedding gifts
Completely exempt regardless of who gives — friends, relatives, or anyone.
Gifts from non-relatives
Exempt up to ₹50,000/year total value. Above that, the entire amount is taxable as income.
Always keep a written gift deed for significant gold gifts — it serves as documentation for IT purposes.
IT Scrutiny — When Does Gold Attract Attention?
Jewellers are required to report cash transactions above ₹2 lakh and ALL transactions above ₹10 lakh to the Income Tax department. These are cross-referenced with your filed returns. Large gold purchases disproportionate to your declared income may trigger a notice.
Traveling with Gold
Domestic travel
No legal limit on carrying gold within India. CBDT safe harbor limits apply as a practical benchmark. Carry in hand luggage for security.
International — bringing gold into India
Documentation tip: Keep all purchase invoices digitally (photo in your phone). For inherited gold, get a written valuation and family declaration. For gifted gold above ₹50K from non-relatives, declare it in your IT return to avoid scrutiny.