Dhanteras and Diwali But buying gold is an old tradition in India. Gold not only adds beauty to a woman’s makeup, apart from this it is also very useful in bad times. Gold is also known as a crisis companion and second insurance in India. That is why people have a great affection for gold. If you are also planning to buy jewelery or gold coins on these Dhanteras and Diwali, first know how much tax you will have to pay. You may be surprised to know that taxes are charged on both the purchase and sale of gold jewelry.
Tax rules on gold jewelry
Long-term capital gains (LTCG) and short-term capital gains (STCG) must be paid on gold. The 2024 budget has reduced the LTCG on gold from 20% to 12.5%. So if you sell gold after holding it for two years, you will have to pay 12.5% LTCG tax on the gains. However, Budget 2024 has removed indexation from gold investments. Therefore, you will no longer get the indexation benefits applicable to LTCG. For physical gold after Budget 2024, the holding period of STCG has been reduced from three years to two years.
Tax on gold mutual funds
Capital gains tax rules were changed after Budget 2024. Under the new rule, the holding period for short-term capital gains will be reduced, but the tax rate will not change. For gold mutual fund units purchased between April 1, 2023 and March 31, 2025, irrespective of the holding period, the gain will be added to taxable income and taxed as per income tax.
gold ETF
If you buy gold ETFs, the gains will be added to taxable income and taxed at the applicable fixed rates (regardless of the holding period). Remember that if you buy gold ETFs after March 31, 2025 and sell them after 12 months, the gains will be taxed at 12.5% without indexation benefits.
Sovereign gold bond
No STCG or LTCG is charged when you sell Sovereign Gold Bonds (SGB) to the Reserve Bank of India (RBI) on maturity. There has been no change to this rule after Budget 2024. If the bonds were sold within three years, the gain was added to taxable income and taxed at the applicable flat income tax rates.
while selling gold jewelry
The tax charged when selling gold jewelry depends on how long you kept it with you. When you sell it, taxes are imposed on the basis of short-term capital gain or long-term capital gain.
Tax on gold received as a gift
People gift gold or jewelery to their family, friends and close people on Dhanteras or Diwali. If you receive gold as a gift from family or relatives, you can get an income tax exemption. If you receive a gift of gold worth more than Rs 50,000 from another person, you will have to pay tax. This income will be subject to tax as it will be considered income from other sources.
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