Taxes on the Gifting of Gold

In India, we have this culture of gifting gold, especially at weddings and some festive occasions. Most of us have at least some amount of gold with us in the physical form either purchased or received/ inherited from parents and relatives. So, it is also important to know the tax implications of gifting gold.

According to the Income Tax Act, gifts can be immovable gifts like fixed assets (property), or movable gifts like legal tender, securities, jewelry, works of art, etc. Apart from physical gold, these days gold can be purchased, sold, and gifted in the form of digital gold, which can be invested from your mobile wallets like Paytm, google pay, etc.

Taxes in the hands of Gold Receiver as a Gift

Taxation on the gifting of gold works similarly as other forms of gifting. If you’re receiving gold as a gift (in the form of jewelry, coins, ETF, etc.) greater than the value of INR 50,000, you are required to pay taxes under IFOS (income from other sources) at slab rates as per section 56(2) of the Income Tax Act. While all gifts up to Rs 50,000 are completely tax-free.

Additionally, if you sell gold that you have received as a gift or inheritance, then that is to be reported as income under capital gains at special rates. And taxes on the capital gain would be determined from the period of holding of an asset by the previous owner.

Exceptions in Gold Gift Taxation:

1. Gifts from relatives: If you’re receiving gold as a gift from your relatives then it is not taxable irrespective of any occasion.

Who are considered relatives as per the Income Tax Act?

  • Your spouse
  • Your parents, grandparents, son, daughter, and grandson.
  • Brother and sister (including their respective spouses) of you and your spouse
  • Brother and sister (including their respective spouses) of your father and mother
    (Friends do not fall under the category of relatives.)

2. Wedding Gifts

Gold or anything gifted on the occasion of your wedding is absolutely tax-free, be it from friends, relatives, or family. However, you are required to disclose the details of jewelry if your annual total income exceeds the prescribed limit of relevant AY.

3. Gifts Inherited

Gifts inherited means the transfer of ownership of assets like property, money, gold, or other assets, from one generation to the next, as a legacy of one’s family is passed down to future generations. Gifts received as inheritance are not subject to taxation.

For instance, If you give away your inheritance (received from your father) to your children and children’s children (lineal descendants ) it will be exempt from tax in their hands.

4. Gold received in Contemplation of Death

You may receive gold in contemplation of death can include situations such as a will, an inheritance, a life insurance payout, or a charity donation. Such receiving is exempt from taxes, as it is considered to be a gift.

Example

If you received a gold gift worth Rs. 36,000 from all of your friends on your birthday, the entire sum is tax-free; however, if the gift was worth Rs. 60,000 or more, the total is taxable because it exceeds the threshold amount of Rs. 50,000.

On the other hand, if such a gift is received on the occasion of a wedding, the entire amount is tax-free.

Taxes for gifting gold as a sender

You must have already paid the taxes on your income earned, and if you’re gifting part of your income or belongings then tax liability is not attracted again.

Can you also clarify, if I gift Sovereign Gold Bonds or Gold ETFs to my adult children , they also follow the same rules as physical gold.

Hi @Vijay_Sharma

Yes, it applies the same taxability on gifting Sovereign Gold Bonds as physical gold. And the interest on such gold bonds will be taxable under Income from Other Sources (IFOS).

Hope it helps.

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