Experts suggest people to weight pros and cons both before they make any decision to buy gold. Though gold is considered a good investment against inflation and provides immediate liquidity, it does not provide consistent returns like stock or bonds and also has costs associated with storage, according to them.
Akshaya Tritiya is considered auspicious for buying valuable assets, including gold and silver, by Indians. Every year, the demand for gold rises ahead of Akshaya Tritiya or Akha Teej, which is celebrated across the country on the third day or ‘tritiya tithi’ of Shukla Paksha. This year, Akshaya Tritiya will be celebrated on May 10, 2024.
Akshaya Tritiya is considered a lucky day for purchasing gold and diamond jewellery. People buy gold jewellery on this day because it has a cultural significance as well the precious metal as store value. The other factor is that in a country like India, buying gold is seen as an investment more than anything else and every year people buy the yellow metal, however small it may be, as per their income and buying capacity.
Experts suggest people weigh the pros and cons both before they make any decision to buy gold. Though gold is considered a good investment against inflation and provides immediate liquidity, it does not provide consistent returns like stock or bonds and also has costs associated with storage, according to them.
The income tax treatment on gold buying varies according to the form of investment. At present, there are various options of gold investment available for buyers. The popular ones are physical gold, digital gold, gold bonds and gold ETFs.
Gold jewellery, gold biscuits, ornaments and coins are physical gold. Physical gold has always been a popular investment option for gold buyers. When you buy physical gold, you are charged 3% GST on the total value. At the time of selling, you are again liable to pay tax. On selling physical gold after holding it for more than 3 years, you need to pay 20.8% long-term capital gains (LTCG) tax with the indexation benefit. This tax includes a tax of 20% and a 4% cess.
If you sell gold within three years of buying, you will be liable to pay tax as per your income tax slab on sale proceeds. Selling gold before completing three years from the date of buying is treated as short-term capital gains tax (STCG). So suppose if you fall under the 30% tax slab as a taxpayer, you will be liable to pay 30% tax on gains made from selling your gold asset, without any indexation benefit.
Digital gold is treated in the same manner as physical gold in terms of taxation on selling. LTCG is imposed on selling digital gold assets at the rate of 20.8% if held for more than 36 months.
However, tax rules for sovereign gold bonds (SGBs) are different as investors also earn a specified interest rate on this instrument. SGBs yield a return of 2.5% per annum and carry a maturity period of 8 years. The investor needs to pay tax on the interest income based on his or her income tax slab. At the time of maturity, the gains are exempt from paying LTCG.
Source: https://www.financialexpress.com/money/buying-gold-on-akshaya-tritiya-income-tax-liability-you-should-not-forget-3482237/
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