How much gold can you keep at home? The 500g rule explained

Ahead of Dhanteras, a common question returns: how much gold can a family keep? The government's 2016 clarification said there is no limit on holding gold jewellery, provided it comes from explained sources, including inheritance. What many people call the "500g limit" is something narrower. It's a guide for tax officers during a search.

During a search, CBDT Instruction No. 1916 of May 1994 says jewellery need not be seized up to 500g for a married woman, 250g for an unmarried woman and 100g for a male family member. The 2016 clarification repeated this, even where it doesn't appear to match income records. Limits apply per person, not per household.

Take a husband, a wife, a son and an unmarried daughter. Their limits are 100g, 500g, 100g and 250g, or 950g in all. At Upstox's 3 November rate of ₹13,812 per gram, the same weight in 24-carat gold is worth about ₹1.31 crore. Real jewellery is usually lower purity, so its value would differ. The weight limit doesn't change with the price.

Officers can leave more unseized, considering family customs and status. But the Madras High Court said in 2024 that the instruction governs seizure, not assessment. Taxmann says other High Courts have treated holdings within the limits as reasonable, so the position isn't uniform. Don't read the limit as a guaranteed tax exemption.

The instruction speaks of jewellery and ornaments. CA Club India's guide says bars, biscuits and coins aren't covered. So a family's investment coins need their own paper trail. Inherited gold, and gold bought from disclosed income or reasonable household savings, wasn't chargeable to tax under the 2016 clarification. Proof of its source is what matters.

The Income-tax Act, 2025, took effect on 1 April 2026. Search powers now sit in section 247, unexplained jewellery in section 104 and the special tax in section 195. Practitioner guides say that rate fell from 60% to 30%, about 39% with surcharge and cess. If the officer detects the income, the penalty for misreporting can reach 200% of the tax.

Keep invoices, gift records, wills, family settlement papers and old valuation reports, stored separately from the gold itself. Selling gold after more than 24 months attracts 12.5% long-term tax without indexation, and earlier sales are taxed at your slab rate. CA Club India says Schedule AL reporting applies only if total income exceeds ₹1 crore. Check with your tax adviser for large holdings.