Tax Rules on Gold:Investors in India invest in different asset classes. These also include equity, debt, gold and other bullion and property. Among these, gold is such an asset class, in which some investors invest money to diversify their portfolio while some traditional investors invest money in it as the main asset class. Gold has been an option for guaranteed returns for a long time, due to which such investors like this asset class. At the same time, due to the opening of many options for investing in gold and its emergence as a safe asset class, the confidence of investors has increased. If you also like to invest money in gold asset class, then you should be aware of the tax rules regarding it.
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Many options for investing in gold
Now apart from physical gold, people are also investing money in digital gold, paper gold, gold bonds and gold ETFs. Anyway, gold is an investment option which can give you stable returns in the long run. Earlier, generally during the ups and downs in the markets, gold used to give better returns. But if we talk about the present time, when the equity market was reaching its peak, the prices of gold also reached its record high. Therefore, money can be invested in gold in any season. At present, it would be wise to invest only after understanding the tax rules (Gold Tax).
tax on physical gold
Physical gold means jewellery, gold biscuits, gold coins etc. Physical gold is the most popular option for investing in gold in India. Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG) have to be paid on physical gold.
The returns received from gold held for 36 months or more are called long term capital gains. According to the Income Tax Act of India, you will have to pay 20 percent tax and 4 percent cess on Long Term Capital Gains (LTCG) while selling gold. In this way the tax on physical gold is 20.8 percent.
The returns received from gold held for less than this period are called short term capital gains. In case of STCG, the tax is levied on the basis of your income tax slab.
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tax on paper gold
Paper gold includes gold mutual funds, ETFs, sovereign bonds etc. The income you earn by selling units of ETF or mutual fund is called your capital gain. According to the tax rules on gold in India, if you earn income by selling the unit after 36 months, then it is Long Term Capital Gain (LTCG) and 20.8 percent tax has to be paid on it. Whereas the returns received from paper gold kept for less than 3 years are called short term capital gains. In case of STCG, the tax is levied on the basis of your income tax slab.
tax on digital gold
The concept of digital gold is no different from physical gold. The only difference is that you can buy them online. There is no hassle of maintenance like physical gold, rather it will be kept in your digital wallet. You can also buy and sell it. Apart from this, if needed, digital gold can be converted into physical gold by paying some extra charge. Moreover, government bodies like RBI or SEBI have no authority to regulate this investment option. If you are planning to buy digital gold, then you should know that this tax is levied on the purchase of gold as per the income tax rules. Like physical gold and paper gold, digital gold will be taxed at 20.8 percent.
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tax on gold gift
Indians inherit gold and gift it to their loved ones on special occasions, including Diwali or Dhanteras. However, if you are receiving gold as a gift or inheritance from family members or relatives, you can get income tax exemption on it.
According to Section 56(2) of the Income Tax Act, there is no income tax on gifting gold jewelery to parents, spouse or children. On the other hand, if you receive a gold gift worth more than Rs 50,000 from someone other than relatives, you have to pay tax. Such income is taxable because it is considered as income from other sources.
Apart from this, you can also get tax exemption on gold jewelery received at your wedding. But if you want to sell these gifts, the government will impose tax as per the capital gains rate.
