Gold Investment Rules: In India, gold is not just an ornament, but a symbol of security and tradition. But did you know that the glitter of gold can also be heavy on your wallet if you are unaware of the tax rules? Whether you buy digital gold or sell old gold, the government is keeping an eye on your every move. In this article, we understand how much tax is deducted from your pocket when buying and selling gold.
How much tax will be levied when buying gold?
When you buy gold from a shop, you don't just pay the market value of the gold. A 3% GST is also applicable on the total price of the gold. In addition, a separate 5% GST has to be paid on the making charges of the jewelry.
Tax on selling gold
The profit earned from selling gold is called capital gains. This profit can be earned in two ways: short-term capital gains and long-term capital gains. For short-term gains, i.e., holding gold for less than 2 years, tax is levied according to the income tax slab. For long-term capital gains, i.e., holding gold for more than 2 years, 12.5% of the profit is deducted as tax.
Digital Gold and Sovereign Gold Bonds (SGB)
If you choose digital options instead of physical gold, the rules are slightly different. The profit earned from selling digital gold is taxed similarly to physical gold. However, if you hold Sovereign Gold Bonds until maturity (8 years), the profit earned is completely tax-free. However, you have to pay tax on the annual 2.5% interest according to your tax slab.
Exchanging old gold for new gold is also not easy
If you are selling old gold and buying new gold, the sale of the old jewelry will be considered a profit and will be taxed. However, you can claim tax exemption under Section 54F of the Income Tax Act, provided you use that money to buy or build a house.
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