The age-old tradition of gifting gold jewelry at weddings remains untaxed, offering a relief to recipients.
According to tax expert Sujit Bangar, founder of TaxBuddy.com, gifts such as jewelry, utensils, furniture, and more, received during marriage, including stridhan under Section 56(2)(X) of the Income Tax Act, are not subject to taxation.
Tax Implications for Gold Gifts Beyond Weddings
For gold gifts received on occasions other than weddings, taxation comes into play.
However, gifts from certain relatives, including husbands, brothers, sisters, and in-laws, are exempt from taxation, as highlighted by RSM India founder Suresh Surana.
It’s essential for recipients to disclose the source of gold gifts if questioned by Income Tax officials, providing supporting documents such as wills or deeds of gift.
Gold Possession Limits: Guidelines for Men and Women
Individuals must be aware of the permissible limits for gold possession. As per tax regulations, a married woman can possess up to 500 grams of gold, while an unmarried woman is allowed up to 250 grams.
Men are permitted to hold up to 100 grams of gold without needing to provide proof of its source.
Income Tax Raids and Unaccounted Gold: What You Need to Know
In the event of an Income Tax raid uncovering gold exceeding the specified limits and its source undisclosed, confiscation may occur.
Tax implications arise if the legitimate source of funds used to purchase the gold is not disclosed.
Suresh Surana highlights that in such cases, a hefty tax rate of 60 percent on the value of gold is applied, along with a 25 percent surcharge, a 4 percent health and education cess, and a 10 percent penalty on the tax.
Additional Factors Considered: Social Status and Traditions in Tax Assessment
Income tax officials take various factors into account, such as evidence, statements, and family traditions, when evaluating the taxation of gold found in raids.
While gold confiscation is a possibility, if taxation is imposed, the rates are notably high, with a cumulative impact of the tax, surcharge, cess, and penalty.
