Can a 20-year-old legally sell gold in India? Here’s what you need to know

A 20-year-old entrepreneur recently shared her experience of being denied the ability to sell gold, despite being the rightful owner. Last year, she purchased 100 grams of 22-carat gold using profits from her small online business, paying 70% in cash and the rest online. With prices currently soaring to Rs 95,000 per 10 grams, she planned to sell the gold to fund a special gift. However, when he approached a buyer, he was refused the sale on the grounds of being "underage."

Her key questions: Is there a legal age restriction on selling gold in India? Or was the refusal merely a store-specific policy?

According to Yash Sedani, Assistant Vice President – Investment Strategy at 1 Finance, there is no legal restriction in India that prevents a 20-year-old from selling gold. "As you are above the age of majority, you are fully entitled to sell your gold. The buyer’s refusal is likely due to their internal store policy or a risk-avoidance approach," Sedani noted.

He added that exploring more traditional jewellery markets like Chandni Chowk or Karol Bagh may be helpful, as traders there might be more flexible and experienced in such transactions. However, carrying proper documentation—including purchase receipts and a valid ID—can smoothen the process regardless of where you go.

So, while there’s no legal hurdle, young sellers may need to navigate cautious retailers—and possibly shop around for a buyer willing to honour the deal.

Gold holdings and tax rules in India

In India, while there’s no legal upper limit on personal gold holdings, the Income Tax Department has issued guidelines to determine acceptable possession during income tax searches. Exceeding these thresholds without proper documentation can trigger scrutiny.

Permissible Gold Holdings (Without Needing Proof)

Category                     Limit
Married Woman         Up to 500 g
Unmarried Woman     Up to 250 g
Men                            Up to 100 g
HUF                            Based on household income

These limits apply only during search operations and to family members of the individual being investigated. If gold is held in excess or belongs to non-family individuals, tax officials may seize it unless ownership is proven.

Gold must also be reported as part of domestic assets in the Income Tax Return if the individual’s total income exceeds Rs 50 lakh.

Capital Gains Tax on Gold Sale

Particulars    Short Term    Long Term
Holding Period    ≤ 24 months    > 24 months
Tax Rate    Slab rate    12.5% (no indexation)
Capital Gains    Sale Price – Cost – Transaction Cost    

For gold bought before January 1, 2001, the cost of acquisition can be the actual price paid or fair market value as of January 1, 2001, whichever is higher. Long-term gains on Gold ETFs or Gold MFs enjoy an exemption of Rs 1.25 lakh.

Tax on unexplained gold seizure

If gold jewellery or ornaments are seized during an income tax raid, the individual (assessee) must establish the legitimacy of ownership and the source of funds used to acquire it. Acceptable proof includes:

A valid tax invoice for the gold purchase, or

Evidence of payment made through recognised banking channels (cheque, NEFT, etc.)

In cases of inheritance, documents such as an original purchase invoice in the name of the first holder, a will, or a family settlement deed can be presented. For gifted gold, the assessee must provide either a tax invoice in the donor’s name or a registered gift deed.

If the individual fails to justify the source of the gold or provides unsatisfactory explanations, the seized gold will be treated as unexplained income. In such cases, it will be taxed at a punitive rate:

60% basic tax

25% surcharge on tax

4% health and education cess
This brings the effective tax rate to 78%.

Additionally, a 10% penalty is levied on the total tax amount, making the overall impact even more severe. Proper documentation is crucial to avoid such heavy tax and penalty burdens.