500 gm gold limit for married women: Supreme Court says they must still explain its source - here's why | What to do now

The Supreme Court has clarified that the 500-gram gold limit for married women does not automatically exempt them from explaining the source of their gold holdings in disproportionate assets cases.

The clarification is important in the context of a Ministry of Finance press release dated 1 December 2016, which stated that gold jewellery up to 500 grams for a married woman, 250 grams for an unmarried woman and 100 grams for a man would not be seized during income-tax searches, even if the holdings did not match their reported income.

However, protection from seizure does not mean exemption from explaining the source of gold. Here's what the case is about and what households need to know.

What is the State of Bihar vs Phulpari Kumari case about?

The case, Phulpari Kumari vs State of Bihar, concerns a disproportionate assets investigation against Phulpari Kumari under the Prevention of Corruption Act. The dispute arose over whether the 500-gram gold limit for married women could be used to explain her gold holdings and prevent prosecution.

On 11 May 2015, the Bihar Vigilance Police registered an FIR against Kumari and her husband under Sections 13(1)(e) read with 13(2) of the Prevention of Corruption Act, 1988, alleging that they possessed assets disproportionate to their known sources of income.

Disproportionate assets cases are cases in which a public servant is accused of possessing assets (property, gold, cash or investments) worth more than their known and lawful sources of income can explain.

On 29 July 2020, after obtaining the required sanction, the vigilance department filed a chargesheet against Kumari alone. On 28 January 2021, the Special Judge, Vigilance, Patna, took cognizance of the offences.

Kumari challenged this order before the Patna High Court. She argued that her gold holdings were within the limits prescribed under CBDT Instruction No. 1916 dated 11 May 1994 and the Ministry of Finance's press release dated 1 December 2016.

These guidelines provide that gold jewellery up to 500 grams for a married woman, 250 grams for an unmarried woman and 100 grams for a male member would not be seized during income-tax searches, even if the holdings did not appear to match the assessee's income records.