Gold purchases are generally high-value transactions and it makes sense to save the receipts. You may want to refer to them later to confirm the weight of gold or the price or date at which it was bought. However, there is another benefit of saving the receipts. They can also help you show the source of gold in cases where you need to show your holding in your income tax return or if there’s a tax scrutiny.

“A person maintaining the invoices need not worry about explaining the source of the gold purchases. It would further help the case of a taxpayer who regularly files an income tax return in addition to retaining invoices for gold purchases," said Archit Gupta, founder and chief executive officer, Cleartax.

If you earn more than 50 lakh from any source of income, you are also required to show your gold holding, including jewellery, under the assets-liabilities schedule, when filing your return. "In case of inherited gold, you can disclose the price paid by the original buyer. However, if you do not have the details of the original price paid, you may disclose the fair market value as on 1 April 2001," said Gupta.

“In case of residents having foreign assets the documents can be asked for verification up to 16 years by income tax office. Hence, if you have gold outside India than filing income tax return with declaration is necessary in schedule foreign asset," said Sudhir kaushik, chief financial officer,

Gold is a capital asset, so you need to pay tax on any capital gains you earn. If you have held the yellow metal for less than three years, you will be required to pay short-term capital gains tax, wherein the entire gain is added to your income and taxed as per your slab. For gold held for more than three years, the long-term capital gains will be taxed at 20% after indexation. “ In order to compute the capital gain or loss on sale of gold and provide the evidence to the income tax officer, in the case of verification one needs to keep the receipt," said kaushik of

Gold you can hold

There is no limit on gold jewellery or ornaments you can hold, according to a circular from the Central Board of Direct Taxes issued in 2016, but you may need to explain the source of the income from which the jewellery is purchased in case of a tax scrutiny.

There is also no limit on the gold jewellery you can inherit. The circular also provides for the limit of gold jewellery or ornaments which will not be seized in case of a tax raid even if it is not matching the income of the person. “Jewellery and ornaments to the extent of 500 grams for married lady, 250 grams for unmarried lady and 100 grams for male member will not be seized, even if prima facie, it does not seem to be matching with the income record of the assessee," said the circular. Tax officials may not seize even higher quantity of gold jewellery based on factors including family customs and traditions, it added.

“It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated," said Gupta of Cleartax.

“If you have inherited gold, you can show a copy of the original invoices or a copy of the gift deed, settlement deed or Will," Gupta added.

If there is no documentary evidence, the tax authorities can consider the family customs, social status and so on for determining the source of gold.