Since its invention, gold symbolised love, prosperity, and traditions. It remains a precious gift for special moments. But as time passed, the gifting methods also changed, from jewellery to coins to electronic gold and finally to investment products. Here are some ideas on smart options for gifting gold along with tax implications. So, your gift is not just thoughtful but also sensible.
Also Read: Outlook Money's Budget 2025 Coverage
Traditional Modes of Gifting Gold: Coins and Jewellery
Gold jewellery and coins are still stamped gold-gifting options. Jewellery is often dispatched as its emotional and aesthetic value presents it as the best gift for a wedding or a celebratory ceremony. On the other hand, coins offer simplicity and flexibility because there are no extra design or craftsmanship charges attached to them. The two are tangible objects and treasured by the recipients.
The income tax on the reception of it through close family members, say parents or siblings or spouses, is exempted. Income tax is charged on gifts made by non-relatives worth more than Rs 50,000 in a year. Capital gains tax will be levied at the time of selling gold. Selling gold after holding for more than three years will attract a 20 per cent long-term capital tax with indexation benefits.
Digital Gold
Digital gold is a modern alternative option offered to gift small quantities of gold online. It saves the need for physical storage and provides the flexibility attributed to the liberty that the recipient can sell or convert it into physical gold at any point in time. Digital gold is made accessible by Paytm, PhonePe, MMTC-PAMP, etc.
Tax laws for gold, digital or physical, are almost the same. Up to Rs 50,000 gifts made to non-relatives are completely exempt from tax. The recipient has to pay capital gains tax on the sale. So, on the face of it, it is hassle-free and secure gifting. The rest is investment-focused gifting, as in Gold ETFs and Mutual Funds.
Investment-gifting ideas would include Gold Exchange-Traded Funds, or gold ETFs for the short-term; this investment gold ETF tracks physical gold prices and is traded in stock exchange markets. The other one is the gold mutual funds, which invest in any gold-related asset and, therefore professionally managed.
These gifts are treated similarly to physical gold under tax. The long-term capital gains tax of 20 per cent with indexation will be applied once bonds are redeemed after three years.
Sovereign Gold Bonds (SGBs)
For a long-term gift, sovereign gold bonds issued by the government can be considered. The benefits of gold investment are provided, and an annual interest rate of 2.5 per cent is offered. SGBs are free of capital gains tax if held till maturity, thus making it a tax-efficient gift for the future.
Though gifting SGBs attracts the same taxation rules as other modes of gold, a tax is accounted for on account of interest accruing, in accordance with the income tax slab applicable. SGBs are a safe as well as returns-generating gifting option for those seeking to invest in both security and returns.
E-Gift Cards and Gold Savings Schemes
Jewellery e-gift cards and gold savings schemes are innovative ways to gift gold. E-gift cards allow recipients to select their preferred jewellery or coins, offering flexibility. Gold savings schemes, where monthly deposits accumulate over time, can help the recipient build gold assets systematically.
These options have tax treatment similar to physical gold gifting. Even though not taxed upon purchase or deposit, eventual redemption or sale is subject to capital gains tax according to the holding period.
Giving Meaning to Gold Gifting
In gifting gold, documentation is always the most pertinent for clarification of the transaction to the parties involved. The proper storage of the gift either in physical or digital forms ensures the security of the gift. One can also educate the recipient about tax implications for the management of their gift.
Gold gifting is always in vogue and can be witnessed whether it involves traditional gifting or using new-age means. Be the method of giving whatsoever, proper awareness of taxation will make that act thoughtful besides prudent in monitory terms too.
