'There’s a tax loophole in India...': Banker reveals how gold worth crores dodges scrutiny

A decades-old tax guideline is quietly allowing Indian households to legally hold up to ₹1 crore in gold without documentation—fueling concerns about its misuse to launder black money.

Investment banker Sarthak Ahuja sounded the alarm on LinkedIn, spotlighting a little-known tax rule that hasn’t been updated since 1994. “There’s a tax loophole in India because of which people can keep ₹1 crore worth of gold without paying any tax on it,” Ahuja wrote.

Under a Central Board of Direct Taxes (CBDT) directive issued in 1994, Indian households can hold gold in specific amounts—500 grams for a married woman, 250 grams for an unmarried woman, and 100 grams for a man—without needing to produce proof of purchase. At the time, a kilogram of gold was worth less than ₹5 lakh. Today, it's worth nearly ₹87 lakh.

“That’s over 10% annual return, which is not the rate at which people's incomes or savings in gold have increased over this thirty-year period,” Ahuja noted, underscoring the disproportionate growth in gold’s market value compared to the rest of the economy.

When tax officials raid a property, they have sweeping powers to assess assets and demand receipts for every item—except within this gold allowance. “This is where things get interesting,” Ahuja wrote. “As gold prices increase, people with undisclosed incomes park such incomes into gold... you can buy worth ₹1 crore without having to give any explanation.”

Despite the explosive rise in gold prices and concerns about tax evasion, the CBDT has not revised these limits. Experts warn that this creates a legal shelter for high-value, undocumented wealth. “Maybe these limits will need revision,” Ahuja suggested, adding that future reforms could lower exemptions for women married after a certain date.