I want to buy gold and keep it for my children’s wedding. I want to use cash to buy gold. So, how much gold can I buy in cash without and with PAN, or Aadhaar proof? What are the income tax implications?
-Seema Nair
By Balwant Jain, tax and investment expert
There are no restrictions as to the amount to which you can pay to buy gold in cash under the income tax laws. However, the income tax laws have restrictions on the recipient for accepting any amount of two lakh rupees or more in cash in respect of a single transaction. So though you can pay any amount to buy gold the jewellery will not accept cash two lakh rupees and more in respect of every single transaction as the law prohibits him from accepting any amount of two lakh rupees or more for each transaction of the sale of jewellry.
In case the jewellry accepts cash beyond two lakh rupees, the income tax department can levy a penalty equal to the amount accepted in contravention of the legal provision.
Moreover, in case you are buying gold from a jeweller for a value over two lakh rupees whether through cash or otherwise, you have to provide the seller with your identity like a PAN card or Aadhaar Card. So you can buy gold upto Rs. 2 lakhs without having to furnish either PAN or Aadhaar number.
Since you are planning to buy gold for the wedding of your children, I would advise you to invest in Sovereign Gold Bonds (SGB) which helps you get better returns over the years. You get interest @ 2.50% every year on the issue price of the SGB. Moreover, as and when the SGB is redeemed, you do not have to pay any capital gains. Moreover, in addition to other benefits of electronic gold, you will not have to pay GST when you purchase SGB though you have to pay GST at the time of purchase of physical gold. Please note that though you may have to pay GST when you actually buy physical gold at the time of the wedding of your children but meanwhile the GST component saved will continue to earn interest and appreciation on your investment.
(Views as expressed by the expert.)
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Updated: 23 Sep 2023, 08:59 AM IST
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