- Buying gold can also bring you under the tax net
- Income tax laws related to tax on gold must also be looked at
- You have to pay 3% GST on gold purchased on a pucca bill.
Tax On Gold : The festival of Dhanteras, the holiest day associated with the purchase of gold and silver in the year, is going to come this week. Gold is not just a metal, it is an important part of our emotions. On the occasion of Diwali, along with gold and silver, we also offer prayers. Whereas for women, gold is the first love. At the same time, gold is also the oldest means of investment. It is said that gold never deceives.
That’s why Indians are always eager to buy gold on every occasion. But this gold purchase of yours can also bring you under the tax net. That is, tax has to be paid on the purchase of gold. In such a situation, if you have bought gold in the form of jewelry or for investment or are going to buy gold, then you must also take a look at the income tax laws related to tax on gold. Today the team of India TV Paisa is giving information about such rules for you, with the help of which you can save tax.
You have 4 options to buy gold
Gone are the days when you used to buy gold by going to a jeweler’s shop. Today’s time is digital, so gold has also become digital. Generally you can buy gold in 4 major ways. These gold buying options include physical gold, gold mutual funds or ETFs, digital gold and sovereign gold bonds. If you have also bought gold on the occasion of this Diwali, then you should also consider the tax liability on it.
How much tax on buying gold from a jeweler
Usually Indians buy gold by going to the goldsmith’s shop. This gold is either in the form of gold jewellery, bars or coins. Let us tell you that you have to pay 3% GST on physical gold purchased from the goldsmith on a pucca bill. On the other hand, the tax liability on the sale of physical gold by the customer depends on how long you have kept them with you.
When is capital gains tax charged
If gold is sold within three years from the date of purchase, the gain will be treated as short-term capital gain and the same will be added to your annual income and taxed as per the applicable income tax slab. On the other hand, if you decide to sell gold after three years, it will be treated as long-term capital gain and will attract a tax of 20 per cent. Along with indexation benefits, 4% cess and surcharge will also be applicable.
digital gold or e gold
India is currently passing through a digital revolution. In such a situation, the trend of digital gold is also increasing in the country. Many banks, mobile wallets and brokerages offer digital gold in partnership with MMTC-PAMP or SafeGold. In case of sale of digital gold, long-term capital gains are taxable at the same rate as physical gold or gold mutual funds/ gold ETFs. That is, 20% tax plus cess and surcharge. But if the digital gold is with the customer for a period of less than 3 years, then the return from its sale is not directly taxed.
Sovereign Gold Bonds
Investors get 2.5 per cent annual interest on sovereign gold bonds, which is added to the taxpayer’s income from other sources. Sovereign Gold Bond is tax free after maturity of 8 years. But in case of premature exit, different tax rates are applicable on the returns of the bonds. Generally, the lock-in period of Sovereign Gold Bond is 5 years. After the completion of this period and before the maturity period, the returns from the sale of gold bonds are kept in the Long Term Capital Gains. Under this, 20 percent tax and 4 percent cess plus surcharge is levied.
Gold MF or Gold ETF
Gold Exchange Traded Fund invests your investments in physical gold. In such a situation, gold purchased in this way is taxed like physical gold. Talking about Gold Mutual Funds, it invests in Gold ETFs.
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