Skip to main content

Physical Gold Holding and Tax liability

Check the tax guidelines before you book profits on gold holdings

If you value gold as an investment avenue, this is a good time to sell part of your holdings and earn a profit. Demand for gold during the current marriage season saw its price peak to `20,800 for 10 grams on November 24. It has since been moving in the same range. Yet, depending on how long you have held the metal and in what form, there will be certain tax implications.

Like land and shares, gold is also considered an asset. Any profit on the sale will attract tax.

The rule for taxation differs for gold exchange-traded funds (ETFs), gold equity funds and physical gold.

Profits from physical gold, such as gold coins, bars or ready jewellery, if sold within three years, are considered short-term capital gains (STCG). They would be added to your total income for the year and you have to pay the tax according to the tax slab applicable.

Selling physical gold assets after three years is a better idea. The holding period of the investment is an important aspect that is looked at by the income tax department.

Long-term capital gains (LTCG) are applicable to gold investments sold after three years. You could use the indexation benefits of LTCG and pay only 20 per cent on the amount earned.

With gold prices rising, the demand for alternative investment opportunities in the metal, such as gold ETFs and gold equity funds, too, are rising. Year-on-year (Y-o-Y) returns from both, gold ETFs and physical gold, has been 13 per cent, on average.

Gold ETFs offered by funds like HDFC or Religare invest in physical gold bars. Investors buying ETFs hold the fund's units. The value of a single unit is equal to approximately one gram of gold.

Gold equity funds such as DSP Black Rock World Gold Fund and AIG World Gold Fund are schemes that typically invest in other international fund of funds, that buy the stocks of companies involved in gold mining.

Both ETFs and gold equity funds are treated as debt funds and taxed accordingly. Selling within a year would attract STCG. For sales after a year, an individual could have to pay the LTCG tax. Under this, you either pay 10 per cent tax without any indexation benefit or 20 per cent on the amount earned or avail indexation benefit.

All LTCG taxes attract an additional three per cent educational cess.

If the new Direct Taxes Code structure takes effect from April 1, 2012, in its present form, investors need to keep in mind the holding period of the investment. Investment assets that have been held on for a year from the end of the financial year during which the asset was purchased will be taxed according to the income tax slabs. But the amount of profit will be arrived at after indexation.

For instance, assume one has sold his gold assets for `2lakh. If after indexation of cost (1.2 lakh), his profit is `80,000, he would add this amount to his other income and pay taxes depending on the tax slab he falls under.

Besides the tax angle, investors are advised to take a cautious approach to selling their gold. Despite the run-up in gold prices, one cannot rule out a further hike. It might be best, for investors, to sell just a part of their gold allocation.

Popular posts from this blog

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis

Impact of Demonetisation

The government's move to demonetise `500 and `1,000 currency notes will immediately impact reserve money and money supply in the system along with the balance sheet of the Reserve Bank of India, the sole authority in the country for accepting currency notes and coins as legal tender. ET explains the interplay of currency, reserve money and money supply. 1. What is currency in circulation? It is the total value of currency (coins and paper currency) that has ever been issued by the central bank minus the amount that has been withdrawn by it. Currency in circulation comprises currency notes and coins with the public and cash in hand with banks. It is a major liability component of a central bank's balance sheet. 2. What is reserve money? It is essentially the central bank's money . It is also called high-powered money , base money and central bank money . As per the definition, reserve money equals currency in circulation plus bankers' deposits

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now