Summary of this article
Supreme Court clarifies gold limits cannot explain asset sources.
Ruling restores disproportionate assets proceedings against Phulpari Kumari.
Gold seizure limits do not prove lawful acquisition.
The Supreme Court has clarified that married women cannot use the 500-gram gold limit as automatic protection in cases involving assets beyond known sources of income. The court has made it clear that protection from seizure during income-tax searches does not mean that a person is exempt from explaining how the gold was acquired.
The Supreme Court passed the order while hearing the case of Phulpari Kumari, who was accused of holding assets beyond her known sources of income. The court overturned an earlier Patna High Court decision that had cancelled the criminal proceedings against her.
Gold Limits Do Not Exempt People From Explaining Their Assets
A Ministry of Finance press release issued on December 1, 2016, provides protection against seizure of gold jewellery up to 500 grams for a married woman, 250 grams for an unmarried woman and 100 grams for a male member during income-tax searches.
These limits were introduced to prevent the seizure of jewellery commonly held by families during tax searches. However, they do not set a maximum limit on how much gold a person can own.
These limits cannot be used as proof of where the gold came from, particularly in cases which deal with allegations of corruption and disproportionate assets.
Supreme Court Allows Criminal Procedure
The beginning of this matter dates back to May 2015, when Bihar Vigilance Police registered a case against Phulpari Kumari and her husband under the Prevention of Corruption Act, 1988. They were accused of having assets that were higher than their known sources of income.
In July 2020, the vigilance department filed a chargesheet against Phulpari. The Special Judge, Vigilance, Patna, took up the case in January 2021.
Kumari subsequently challenged this in the Patna High Court. She argued that her gold holdings were within the permitted limit. The High Court agreed with her argument and cancelled the proceedings on May 14, 2026.
However, on November 2, 2026, a Supreme Court bench comprising Justices K.V. Viswanathan and Arun Palli overturned the High Court's decision. It restored the earlier order, allowing the criminal case to proceed.
The court clarified that people facing disproportionate assets charges must explain how they acquired their property, gold and other assets. The gold seizure limits alone cannot serve as an explanation.
Significance Of The Judgement For Gold Owners
The decision does not make it illegal to own more than 500 grams of gold or introduce a new limit on gold ownership. It also does not require every household to provide proof of its jewellery holdings.
However, keeping purchase bills, payment records, inheritance papers and gift documents can help establish the source of gold if questions arise during an investigation. Wedding photographs may also help support claims about jewellery received as gifts.
