Income Tax Rules on Gold: Can you buy gold with cash without any limit, or is this also monitored by the Income Tax Department? And is any ID proof required to invest in gold? Let us understand what you should know while buying gold.
Income Tax Rules on Gold: Festive season has arrived, wedding season is coming, which means it is time for gold shopping. And if we look at the trend of buying gold, then mostly people still prefer to deal in cash, but can you buy gold with cash without any limit, or is this also monitored by the Income Tax Department? And is any ID proof required to invest in gold?
Rules for buying gold
To regularize gold, the Income Tax Department has kept the Gems and Jewelery sector under the Prevention of Money Laundering Act (PMLA), 2002. There are two things – first, if someone is buying gold with cash, then he can buy gold with cash only up to a limit and if he is buying gold with cash above that limit, then he will have to follow KYC rules. That means jewelers can ask him for details of his PAN or Aadhaar. If someone does a transaction above Rs 10 lakh, he will have to give information about it.
2 lakh rule
And as far as cash transactions are concerned, there is section 269ST of the Income Tax Act. Under this, you cannot do transactions of more than Rs 2 lakh in a day, so basically if you buy gold by paying more than Rs 2 lakh in cash, then you will be breaking the rules. And there is also a penalty on this, which is imposed on the person taking the cash.
What proof is needed?
Apart from this, if we talk about proof, then if you are buying gold worth more than Rs 2 lakh, then you have to give the details of your PAN, whether you are paying through cash or any other mode.
Charge on Gold
Now when you buy gold, what are the charges you are paying? First of all, 10% import duty is imposed on gold, apart from this you also have to pay 3% GST and making charges. Besides, the government also imposes 5% AIDC i.e. Agriculture Infrastructure Development Cess on gold import. Finally, if you buy gold worth more than Rs 1 lakh in a year, you will have to pay 1% TDS on it.
