Buying gold this festive season? Check tax rules on cash purchases, PAN requirement and limit on holding gold at home

Gold purchases typically pick up during the festive season in India, with many households buying jewellery, coins and bars for investment or as part of tradition. This uptick demand is often witnessed during Akshaya Tritiya and Dhanteras, as buying gold is considered auspicious on these occasions.

While there is no blanket limit on how much gold a person can legally own, tax authorities may scrutinise holdings if the source cannot be explained. Here's what you need to know about tax rules on cash purchases, PAN requirement and the limits on holding gold at home without having to produce proof.

India does not ban buying gold using cash, but it does restrict the amount that can be accepted in cash in certain circumstances. However, the burden of this compliance requirement lies on the seller and not the buyer.

Under Section 269ST of the Income-tax Act, an individual cannot receive ₹2 lakh or more in cash in a single transaction, in a single day from one person, or in respect of transactions relating to one event or occasion. The same set of restrictions apply to gold purchases as well.

The rule is designed to prevent people from bypassing the cash limit by splitting payments across multiple invoices or days for the same purchase. Under Section 271DA, the penalty for violating this provision can be equal to the amount received in breach of the rule, and it is levied on the recipient.

For gold purchases made in cash, the recipient is the jeweller, giving them a strong incentive to refuse cash payments for high-value items.

When the transaction value crosses ₹2 lakh, jewellers are required to ask buyers to provide their Permanent Account Number (PAN) card for reporting and compliance purposes, as per income tax rules.

Providing PAN does not override the restrictions on cash transactions. From 1 April 2026, Form 97 replaced the previous Form 60 for certain declarations by individuals who do not have a PAN.

Separately, jewellers are subject to Know Your Customer (KYC) requirements under anti‑money‑laundering regulations, which may require identity verification depending on transaction size and risk profile.

In a clarification issued in December 2016, the Ministry of Finance stated that there is no limit on holding of gold jewellery or ornaments by anybody, provided it is acquired from explained sources of income, including inheritance.

The ministry also clarified the quantities of gold jewellery that would not be seized during income tax raids, even if the holdings do not appear to be in line with the taxpayer’s disclosed income.

• For married women: Income tax officers will not to seize or confiscate gold ornaments weighing up to 500 grams.
• For unmarried women: The limit prescribed for an unmarried female in the family is lower at 250 grams.
• For males: A limit of 100 grams of gold jewellery and ornaments per person has been prescribed, whether married or unmarried.

If you have more jewellery at your home than the prescribed limits, it does not automatically make the excess gold illegal or automatically liable to seizure.

In such cases, the taxpayer should also be able to satisfactorily explain where the jewellery came from, along with providing supporting evidence. Such evidence can include purchase bills, bank withdrawal records, inheritance documents, gift deeds or other such documents.

Income tax officers conducting a search or raid also has the discretion to not seize even higher quantity of gold jewellery than mentioned above based on factors such as family customs and traditions, the clarification noted.

Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.

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