Investing in gold? Know how much tax you need to pay while selling different types of gold
New Delhi: Dhanteras is coming soon and it is traditionally the country’s busiest gold buying period. You can buy jewellery from shops which sell hallmarked ornaments, gold coins or gold bars. Coins can be brought either from jewellers or from banks. Other options like gold ETF, digital gold and gold bonds too are becoming preferred choice for many individuals.
But do you know how much tax you are liable to pay on sale of gold? We are discussing 4 types of holding gold and the tax you have to pay after selling it.
India is the world’s second-biggest consumer of the yellow metal, however most of the retail purchases are made offline means people hold physical gold as gold bars, gold coins and most popularly gold ornaments. If you sell your physical gold after holding it for 36 months or 3 years then you will be liable to pay capital gains tax of 20% with indexation benefits. If you sell it before the aforementioned period, the gains on sale of gold will be added to your total income tax and you will be liable to pay tax as per your permissible income tax slab.
When an investor wants to invest in gold, ETF’s are a considered as the simpler of the options. Such ETFs have high-performing effects on the market. This is a simpler option because the investor can own gold without owning it in physical terms. Investor only owns a percentage of what the stock of gold represents.
Gold ETF units are taxed like debt funds or physical gold, subject to its long-term and short-term sale period and the capital gains tax rising out of it. If you sell Gold ETF after 36 months, you will have to pay tax of 20% with indexation benefits. If you sell it before the aforementioned period, you will pay the gains as part of your income tax, depending on which slab you fall.
Digital Gold is yet another form of investment in gold and are offered by several companies through their apps. These digital gold are stored in vaults. Customers can sell it online at the prevailing gold price and are preferred by many as against traditional investing in gold. The tax arising out of the sale of digital gold is same as that of physical gold or gold ETF.
Gold bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).
Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.