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.

The Patna High Court accepted her argument and quashed the cognizance order on 14 May 2026, observing that her gold holdings did not exceed the permissible limit.

However, the Supreme Court, on 2 November 2026, set aside the High Court’s decision. A bench of Justices K.V. Viswanathan and Arun Palli held that the gold-holding guidelines cannot, by themselves, explain the source of assets in a disproportionate assets prosecution.

The court observed, “Merely showing certain press release and circulars permitting the holding of gold to a certain extent will not amount to accounting for the possession of the said assets.”

The SC held that the High Court’s reasoning was untenable, as an accused facing prosecution under the Prevention of Corruption Act must explain allegations of possessing assets disproportionate to their known sources of income.

The SC restored the Special Judge’s 28 January 2021 cognizance order, directing that the case proceed from that stage.

Why did the Supreme Court rule against Phulpari Kumari?

Alay Razvi, Managing Partner, Accord Juris, said the Supreme Court restored the proceedings on November 2, holding that the CBDT guidelines do not, by themselves, explain the source of the jewellery. The order was not a conviction but a decision to allow the disproportionate-assets case to proceed.

“CBDT’s 1994 instruction, reiterated by the Finance Ministry in 2016, provides protection against the seizure of gold jewellery during income-tax searches up to 500 grams for a married woman, 250 grams for an unmarried woman and 100 grams for a man. These are not ownership limits or automatic exemptions from explaining the source of gold. Households can legally hold more gold, provided they can explain its acquisition.”

Razvi clarified that this is a corruption and disproportionate-assets case. The Supreme Court neither asked every household to explain its jewellery holdings nor withdrew existing seizure safeguards. It only held that these safeguards cannot, by themselves, justify quashing a corruption prosecution.

For households, the distinction is between ownership, protection from seizure and proof of acquisition. Holding less than the prescribed limit does not automatically establish a legitimate source, while holding more does not automatically make possession unlawful, he added.

Should ordinary households be worried?

Pranshu G, Partner at Ashok Pranshu & Co, said the ruling has limited relevance to ordinary households because it concerns a disproportionate-assets case involving a public servant, who is required to account for assets against known sources of income.

“The 2016 clarification confirms that lawfully acquired gold has no ownership ceiling, provided its source is explainable.”

He clarified that the ruling does not make gold holdings above the prescribed limits illegal. For ordinary households, the law remains unchanged: legitimately acquired gold is fully protected, but unexplained gold does not become legitimate merely because it falls within the non-seizure limits.

What should you do now?

Pranshu G advised women to preserve available purchase bills, payment records, inheritance documents, wills, gift records and wedding photographs to support the source of their gold. However, women are not required to have invoices for every old or inherited ornament.

The ruling does not create any new documentation requirement for households. Missing bills do not automatically make gold illegal, but the 500-gram limit does not replace the need to explain its source at the time of scrutiny. Families should maintain genuine records and seek professional advice if they face a tax or vigilance inquiry, Razvi added.

Disclaimer: This is for informational purposes only and explains the Supreme Court’s ruling. It should not be construed as legal or tax advice.