Investment in Gold: Due to the excellent returns gold gives, a large number of people are being attracted to invest in it. If you are going for investment, then it is not necessary that you go to the bullion market and buy physical gold only. You can invest in digital gold. This includes Sovereign Gold Bonds (SGB) and Gold ETFs (Exchange Traded Funds). Both digital gold and physical gold are taxed in the same way. But the tax rules are different in Sovereign Gold Bond. Also keep in mind that physical gold has manufacturing charges. If you keep it in a bank locker, there are charges for that too. At the same time, there are no such charges in digital gold.
Tax on gold investment options
Sovereign Gold Bond (SGB)
Tax rules are different for sovereign gold bonds. If you sell them in the secondary market within 3 years of purchasing them, they will be taxed as per your slab rate. But if you sell them after holding them for three years, then they attract long term capital gains tax of 20 per cent after indexation. And if you keep them till maturity, there is no tax on them. The maturity period of these bonds is 8 years and after 5 years, the option of early redemption is also available. The 2.5 percent annual income earned on these bonds is taxed as per the slab.
Gold Exchange Traded Fund (ETF)
Earnings on ETFs are taxed as per the income tax slab. It doesn’t matter when you sell them. According to AMFI data, there are 17 gold ETF schemes with total AUM of Rs 28,529 crore as on February 29, 2024.
Physical gold (coins/biscuits)
Tax on physical gold is the same as on digital gold. If it is sold after 3 years of purchase, it attracts long term capital gains tax at 20% + 8% cess. When it is sold within 3 years, the gains will be added to your income and taxed as per the slab.
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