The gold coin, which your uncle gave you as a gift on Diwali five years ago, may now be safely kept in your locker. Or maybe your granny gave you a gold chain while celebrating at a family function.
But when you get a gift like this, you may not bother about any paperwork related to it.
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This is where keeping a few records can save you from unnecessary tax questions.
Is gold received from relatives taxable?
According to the income tax laws of India, any gold jewellery, coins, or gifts received from certain relatives will be exempt from taxes irrespective of their value. These relatives include parents, siblings, spouses, and some other family members as per the law.
If gold is received as a gift from a friend or non-relative, it will be taxed if the total value of all gifts exceeds Rs 50,000 during the financial year.
How do you prove that the gold belongs to you?
Think of selling a gold coin given by your uncle some years back. There might be no purchase receipt in your name. In such cases, make sure to maintain documentation like a gift deed, gift letter, original purchase receipt, photographs of the gift occasion, or bank transactions for the same.
A gift deed is not mandatory for all gold gifts, but having written proof makes it easier to prove ownership.
What about tax when you sell it?
The sale of gifted gold can be subject to capital gains tax. The cost of purchase will normally be assumed to be the original cost incurred by the individual from whom the gold was gifted to you. The holding period of the previous owner will also be included in your holding period.
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If the gold is held for more than 24 months, the gain is generally treated as a long-term capital gain and taxed at 12.5% without indexation under current rules.
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