Complete Tax Guide on Golf
Buying gold on special festivals like Dhanteras and Diwali is considered auspicious. This is the reason why gold sales are breaking records these days. But if you are buying gold not just for wearing but for investment, then it is very important for you to have correct information about its tax rules.
While buying traditional gold jewelery may be the most common way, people are now moving towards smart options like gold ETFs and Sovereign Gold Bond (SGB). These not only save you from the hassle of storage and purity, but also prove to be a profitable deal in terms of tax.
How is gold jewelery taxed?
When you buy jewelery or gold bars, you have to face making charges, GST and capital gains tax on sale later. If you keep it for more than 24 months, then you will have to pay 12.5% tax on it without indexation (as per rules after July 23, 2024). Whereas if you sell in less than 24 months, tax will be charged as per your income tax slab. Keep in mind, there is no tax exemption on physical gold and storing it is also a tension.
Gold ETF: Flexibility and tax benefits
Gold ETFs, i.e. Exchange Traded Funds, are mutual funds that follow the prices of gold. They can be bought and sold through the stock market, so it is easy to sell them and there is no lock-in. If you sell ETF units purchased before April 1, 2025, before 12 months, you will have to pay tax as per the income tax slab. Units held for more than 12 months now attract 12.5% tax (without indexation).
SGB: Best for long term
SGBs, i.e. Sovereign Gold Bonds, are issued by the Government of India. These are for a period of 8 years and you also get 2.5% interest every year, which comes into your bank account. Now talking about taxes, these are the most beneficial. If you cash SGB on maturity of 8 years, then there is no tax on it. That means the entire profit is tax free.
Whereas if you sell it first, then you have to pay 12.5% tax if you keep it for more than 12 months. If sold in less than 12 months, tax is charged at the slab rate. However, the 2.5% annual interest earned is taxable by adding it to your income. SGB is good for those who think long term and also want to avoid tax.