• Notification Date: 05-05-2022
• Notification No: N/A

Tax Rates on Different Gold Investments

Gold investment is considered as a valuable asset and there are various types of gold investments. The different types of gold investments in the market are paper gold, physical gold, and electronic gold. Physical gold is the age-old traditional form of gold investment that we buy in the form of solid gold metal. Paper gold and electronic gold are the new forms of gold investments that have landed in the market. The Founder and CEO of Clear, Mr. Archit Gupta has stated his opinions about the income tax rates on physical gold. He stated that the tax rates on the physical gold investments, such as gold ornaments and coins, depend on the holding period. For long term capital gains that are earned after selling physical gold after three or more years, are subjected to taxation at the rate of 20.8 per cent.

Digital gold is taxed at the same rate as physical gold. If the gold is held for a period less than three years, then the taxation subjected on the gold is applicable as per the normal income tax rates. Long term capital gains earned after selling digital gold after a period of three years or more, are taxed at 20.8 per cent along with indexation benefit. Through indexation, the taxpayers are allowed to recalculate the purchase price of the investment after adjusting for inflation. This further reduces the tax outgo.

There are several types of paper gold investments, such as Gold ETFs, Gold Mutual Funds, and Sovereign Gold Bonds (SGBs). The tax rates on Gold ETFs and Gold Mutual Funds are the same as physical gold. But sovereign gold bonds (SGBs) are subjected to different taxation rules. The investors receive interests from the SGBs at the rate of 2.5 per cent per annum. This income is added to the taxable income of the investors and taxed accordingly. The Sovereign Gold Bonds (SGBs) take a period of 8 years to mature. If the investor holds the SGBs till the end of the maturity period, the capital gains earned from them will be free from taxes.

The investors may buy and sell Sovereign Gold Bonds over Stock Exchange. If the SGBs are sold before the tenure ends, then the income earned by the investor from them will be charged with taxes as per the income tax slabs. The long term capital income earned by an investor after selling the SGBs after three years will be charged with 20% tax along with indexation benefit.