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According to the rules of the Income Tax Act, the son will not have to pay any income tax on the cash or bank transfer of ₹ 15 lakh received from his mother. Under Section 56(2)(x) of the Income Tax Act, the parents come under the category of ‘Specified Relatives / Lineal Ascendants’. According to law, there is no upper financial limit on gifts received from a relative. Whether a mother gives ₹50,000 or ₹50 lakh to her son, the amount is completely tax-free in the hands of the recipient (son). However, the legal and tax process of this entire transaction is divided into two parts, which is very important to understand.
Even if the gift received by the son is tax-free, It will be mandatory for the mother to pay Capital Gains Tax on the profit made from selling jewellery.. The Income Tax Department considers gold jewelery as ‘capital asset’.
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Long Term Capital Gain (LTCG): If the jewelery was kept with the mother for more than 24 months (2 years), the profit from the sale will be considered as long term capital gain. Tax at the rate of 12.5% (without indexation) is applicable on this.
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Calculation of profits: The original cost of acquisition of jewelery will be deducted from ₹15 lakh (selling price). The remaining net profit will be subject to 12.5% tax and surcharge/cess.
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Short Term Capital Gain (STCG): If the jewelery is sold in less than 24 months, the profits will be added to the mother’s total annual income and taxed based on her normal tax slab.
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The mother will have to show in the ITR: The mother will have to enter correct details of sale of jewellery, sale price and tax liability under the head ‘Capital Gain’ in her income tax return for the respective financial year.
| party/person | tax liability | Applicable Income Tax Section/Rule | Mandatory Compliance and Documents |
| son (gift recipient) | Zero Tax | Section 56(2)(x) – Gift received from relative tax-free | Gift Deed, Entry in Bank Statement, Declaration as ‘Exempt Income’ in ITR |
| Mother (jewelry seller) | Capital gains tax payable | Section 45/112 – Long Term Capital Gain (12.5%) | Confirmed sales bill from jeweller, original purchase receipt, disclosure of capital gain in ITR |
The Income Tax Department keeps a close watch on high-value transactions through modern data analytics and AIS. Follow these steps to avoid any investigation or scrutiny notice in future:
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Transfer money through banking channel only (No Cash): The amount of ₹ 15 lakh of jewelery from the jeweler should come into the mother’s bank account (RTGS/NEFT/cheque). After this, the mother should transfer this amount from the same account to the son’s bank account through check or net banking. Under Section 269ST of Income Tax, cash transactions of more than ₹ 2 lakh are completely prohibited and can attract heavy fine.
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Make sure to get a gift deed: Get a ‘Gift Deed’ of Rs 15 lakh prepared on stamp paper of Rs 100 or Rs 500. It should be clearly mentioned that the mother is gifting this amount to her son through bank transfer of her own free will and love, and no consideration has been taken in return.
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Valid invoice for sale of jewelery (Jewelry Invoice): Preserve the firm sale invoice received from the jeweler, clearly mentioning the net weight, carat (purity) of the gold sold and TDS deducted (if applicable).
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Tax on son’s future profits (Clubbing Provisions): The son does not have to pay tax on the original amount of the gift, but if the son invests that ₹15 lakh in a fixed deposit (FD), stock market or mutual fund and earns any interest or return on it, then on that future earning the son will have to pay regular tax as per his slab. The rule of clubbing does not apply in the case of an adult son, hence the mother will not have any liability on the additional earnings.