Diwali 2026: Planning to gift gold? Check how much is tax-free and when tax applies

Diwali 2026: Gold is a popular gift during Diwali. Whether it is a gold coin, jewellery or another form of gold, the tax treatment depends on who gives it and the value of the gift. While gold received from specified relatives is exempt from income tax, gifts from non-relatives are subject to a value-based limit.

There are also exemptions for gold received on the occasion of marriage and through inheritance. However, receiving gold tax-free does not mean that you will never have to pay tax on it. If you sell the gold later, capital gains tax may apply.

Here is a look at the income tax rules, exemptions and limits you should know before giving or receiving gold this Diwali.

Gold gifts from relatives: No upper limit

Under Section 92 of the Income Tax Act, 2025, gold received as a gift from specified relatives is fully exempt from income tax, irrespective of its value.

This means that if your parents, spouse, siblings or grandparents gift you gold, there is no monetary limit on the exemption. The value of the gold does not change its tax treatment.

The definition of relatives also covers certain relationships through the recipient's spouse and members of a Hindu Undivided Family (HUF), subject to the conditions in the law.

What is the Rs 50,000 limit on gifting gold?

The tax rules are different when gold is received from friends, colleagues or other people who do not fall under the specified definition of relatives.

Gold gifts from non-relatives are exempt if the total value of such gifts received during a financial year does not exceed Rs 50,000. The value of gifts from different non-relatives is added together to check this limit.

If the combined value crosses Rs 50,000, the entire amount becomes taxable as income from other sources, not just the amount above the limit.

For example, if you receive gold worth Rs 30,000 from one friend and Rs 25,000 from another during the same financial year, the total value is Rs 55,000. Since it exceeds the Rs 50,000 limit, the full Rs 55,000 is taxable at the applicable income tax slab rate.

Which gold gifts are tax-free?

Apart from gifts from specified relatives, the Income Tax Act provides exemptions in certain other situations.

These exemptions are provided under Section 92(3) of the Income Tax Act, 2025.

What happens when you sell gold received as a gift?

Receiving gold as a gift without paying tax does not mean that its future sale will also be tax-free. If you sell the jewellery or other gold asset later at a profit, capital gains tax may apply.

The holding period and cost of acquisition are important while calculating the tax. In the case of gifted gold, the previous owner's holding period is also considered. The cost of acquisition is generally linked to what the previous owner paid for the asset. For gold acquired before April 1, 2001, the fair market value as on that date may be considered, subject to the applicable rules.

For physical gold, the holding period is generally more than 24 months for it to qualify as a long-term capital asset. Long-term capital gains are taxed at 12.5 per cent without indexation, while short-term gains are added to the taxpayer's income and taxed at the applicable slab rate.

For example, if your grandfather bought a gold necklace for Rs 1 lakh and it was later gifted to you, the original purchase cost may be considered while calculating your capital gains when you sell it. The holding period will also include the time for which your grandfather owned it.

Key things to remember before gifting gold this Diwali

Gold received from specified relatives, on the occasion of marriage or through inheritance is exempt from tax, irrespective of its value. However, gold received from non-relatives is subject to the Rs 50,000 aggregate limit in a financial year. If the limit is crossed, the entire taxable value is added to income from other sources.

Also, keep in mind that the tax rules for receiving gold and selling it are different. Even if the gift is exempt when received, selling it at a profit in the future may attract capital gains tax.