ITR Filing FY25: Do You Need to Pay Tax on Inherited Gold Jewellery?

Gold has long held sentimental and financial value in Indian households. Whether passed down through generations or received as gifts on auspicious occasions, gold remains one of the most treasured assets. 

But what are the tax implications of selling inherited gold, as you file your returns for FY25 under the latest tax provisions? Let’s take a closer look.

Is Inherited Gold Taxed?

Yes, but not at the time of receiving it. Inherited gold jewellery is classified as a capital asset under Indian tax laws. When it is eventually sold, any profit made is considered a capital gain and thus becomes taxable.

The good news is that capital gains tax applies only when the asset is sold, not when it is inherited or gifted by a relative.

Cost of Acquisition and Holding Period

When calculating capital gains on inherited gold, 2 things matter:

1. Cost of acquisition
2. Period of holding

For inherited assets, both these aspects are linked to the previous owner. So if you inherited gold from your mother, and she had inherited it from your grandparents, the original date and cost of acquisition go as far back as that first ownership.

Special Case: Jewellery Acquired Before 1 April, 2001

If the jewellery was originally acquired before 1st April 2001, you have the option to consider either the actual cost to the original owner or the fair market value (FMV) as on 1st April 2001, whichever is higher.

Since most people won’t have receipts or documentation from decades ago, valuation reports from certified jewellers or historical gold price references can be used to establish FMV.

New Rule from 23rd July 2024: Reduced Holding Period

Until recently, gold was considered a long-term capital asset if held for more than 36 months. However, with the Finance Act (No. 2) of 2024, effective from 23rd July 2024, this holding period has been reduced to 24 months.

This means that for sales on or after 23rd July 2024, gold held for more than two years qualifies as a long-term capital asset.

Given that inherited jewellery is often held for decades, most such sales will easily meet the long-term criteria.

How Is the Tax Calculated on Gold for FY25?

For ITR Filing in FY25, here’s how tax on the sale of inherited gold jewellery will be treated:

So, if you're selling inherited gold after holding it for more than 24 months on or after 23rd July 2024, the capital gains will be taxed at 12.5%, regardless of your income tax slab.

Read More: Gold and Real Estate Still Rule India’s Wealthy; Richest 1% Control 60% of Assets.

Conclusion

While the gold jewellery itself may come at no initial cost to you, any profits from its sale are subject to capital gains tax. With the updated rules applicable for ITR Filing in FY25, especially the reduced holding period and fixed tax rate for long-term gains, it’s important to correctly assess the cost of acquisition and report the sale accurately in your return.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.