By Rajesh Londe, 3rd generation Nagpur jeweller and BIS certified valuer | Published 3 August 2026
Reading time 8 minutes. General information for gold owners, not tax advice.
CBDT Instruction No. 1916 was issued on 11 May 1994. It applies to a search carried out under Section 132 of the Income Tax Act, 1961. It instructs the authorised officer not to seize jewellery and ornaments up to the following quantities, and not to treat them as unexplained investment.
| Family member | Quantity left unseized | What it means |
|---|---|---|
| Each married woman | 500 grams | No explanation demanded up to this weight |
| Each unmarried woman | 250 grams | No explanation demanded up to this weight |
| Each male member | 100 grams | No explanation demanded up to this weight |
Two things follow from reading the instruction rather than the headline. First, the figures are per person and they add up. A household with two married women, one unmarried daughter and one adult male carries a combined unquestioned threshold of 500 plus 500 plus 250 plus 100, which is 1,350 grams. Second, the instruction is written as a floor for the officer, not a ceiling for you. It expressly allows a larger quantity to be left alone after taking into account the family's status and the customs of the community it belongs to. In practice appellate tribunals have applied that clause generously to Indian families where jewellery passes down through generations.
The common belief is that holding more than 500 grams is somehow illegal, or that the excess is automatically taxed. Neither is true. There is no wealth tax in India today and no cap on gold ownership. What exists is an evidentiary burden that switches on above the thresholds: below them the department does not ask, above them it may, and you answer with documents.
This distinction matters most for the families who are least worried about it. A household that has accumulated jewellery across three generations will comfortably exceed the thresholds and will usually have the weakest paperwork, because the oldest pieces predate any invoice anyone kept. That is the real problem to solve, and it is solvable.
Four kinds of record do the work. In rough order of strength:
If the paperwork for older pieces is genuinely gone, a written valuation from a BIS certified valuer establishing present weight and purity is the standard substitute. It does not manufacture a purchase date, but it does establish exactly what you hold, which is the harder half of the problem.
Holding gold is not a taxable event. Selling it is. The treatment turns on how long you held it.
| Holding period | Classification | Rate applied to the gain |
|---|---|---|
| More than 24 months | Long term capital gain | 12.5 percent, without indexation benefit |
| 24 months or less | Short term capital gain | Added to income, taxed at your slab rate |
The gain is the sale value minus the cost of acquisition, which is where the invoice earns its keep a second time. For inherited gold the holding period includes the years the previous owner held it, and their cost becomes your cost, so a piece inherited last year but bought by a grandparent in 1994 is long term.
One practical rule worth knowing: under Rule 114B of the Income Tax Rules, PAN is required where a single purchase or sale of bullion or jewellery exceeds Rs 2,00,000. Splitting one transaction into smaller bills to stay under it is not a workaround, it is a pattern that attracts attention.
This page is general information, not tax advice. Rates and thresholds change with each Finance Act and individual circumstances vary. Confirm your own position with a chartered accountant before acting on any figure here.
GST on gold jewellery is charged at 3 percent of the total invoice value, and it must appear as its own line on the bill. If a showroom hands you a single figure with no GST line, no weight and no HUID, you are being asked to trust arithmetic you cannot see, and you are also being left without the document that establishes your cost of acquisition years later. Ask for a fresh itemised invoice before paying. Any jeweller who will not print one has told you something useful.
For a line by line audit of a gold bill, including the standard Nagpur making charge bands, see our gold bill verification checklist.
Many families reduce the pile at home by exchanging old pieces for new jewellery rather than selling for cash. It is worth being clear that an exchange is still a transfer of the old gold, so the capital gains rules above can apply to it in the same way a cash sale would. The practical difference is the documentation: an exchange done properly produces a fresh itemised invoice for the new piece that records the weight and value of the old gold surrendered against it, which is a far better record than a cash sale with no paper at all.
At Londe Jewellers Gold & Diamonds we accept 22K and 24K gold for exchange at the prevailing IBJA rate with zero deduction, including pieces originally bought from any other jeweller in India, and the old gold weight and valuation are printed on the new invoice. The full policy is on our gold exchange in Nagpur page. Note also that we settle old gold, refunds and returns by bank transfer or UPI, never in cash, which leaves both sides with a traceable record.
If your family jewellery has no paperwork behind it, the first step is knowing exactly what you hold. Bring your pieces to our Sitabuldi store and we will weigh and test every item on the counter in front of you and hand you a written valuation listing each piece by weight and purity. There is no charge and no purchase required.
We also run the same counter valuation at our Gokulpeth, Manish Nagar and Nandanvan stores, all open 11 AM to 8:30 PM.
