The Income Tax Department has extended the deadline for submitting returns for the year 2025 from July 31 to September 15, which is a huge comfort to taxpayers. Given that many people get gold as presents during the current wedding season, this addition is especially appropriate. The tax ramifications of such donations must be understood by taxpayers.

How Do You Tax Gold?

The tax laws in India are quite stringent when it comes to presents given at a wedding. The Income Tax Act states that cash and gold presents given at a marriage are tax-free regardless of their value. However, gifts worth more than Rs 50,000 that are given on occasions other than marriage will be taxed. Notably, the amount of tax-free wedding presents is unlimited.

When Does Income Tax Come Into Play?

The selling of gold that was given as a wedding present is subject to income tax. Capital gains tax is applied to the profit, which is determined by subtracting the selling price from the market value at the time of the gift. Depending on the length of time held, this tax is categorized as either short-term or long-term.

When Does Capital Gains Tax Apply to Both Short-Term and Long-Term Gains?

The gold must be sold within 36 months (3 years) after receipt in order to avoid short-term capital gains (STCG) tax. The individual’s normal income is taxed in accordance with the appropriate income tax bracket after the profit from such a transaction is added to it and classified as a short-term capital gain. This indicates that the tax is paid according to the individual’s income tax slab rather than a separate capital gains tax rate.

Gold is considered a long-term capital gain and is subject to 20% taxation if it is sold after more than 36 months, with the added advantage of indexation to take inflation into account.

How Should a Gold Sale Be Reported in an ITR?

It’s critical to appropriately declare capital gains from the selling of gold on an income tax return. Despite being tax-exempt, gold given as a wedding present has to be declared under the “Exempt Income” section so that the tax authorities know where it came from.

When Will There Be an Income Tax?

Rules pertaining to gold obtained during marriage are outlined in the Income Tax Act. The gold is not taxed if it is a gift from a family member. However, depending on the relevant income tax bracket, the whole amount becomes taxed as income if it is received from a non-relative and is worth more than Rs 50,000.