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Business News/ Money / Personal Finance/  Gold prices rise 7.60% this month, 15% in YTD. How income tax rule applies on your gains?
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Gold prices rise 7.60% this month, 15% in YTD. How income tax rule applies on your gains?

Gold prices have risen from nearly ₹59,500 to ₹72,500 per 10 gm levels in YTD time

Income tax rule for gold: Long-term capital gain is applied on physical gold investment for three years or more whereas short-term capital gain is applied on physical gold investments for less than three years period. (Photo: AFP)Premium
Income tax rule for gold: Long-term capital gain is applied on physical gold investment for three years or more whereas short-term capital gain is applied on physical gold investments for less than three years period. (Photo: AFP)

Income tax rule for gold: Amid fear of the Iran-Israel war, the gold rate today is in an uptrend bias. Despite the weak opening of the gold price today on the Multi Commodity Exchange (MCX), gold price in the domestic market has risen to the tune of 7.60 percent in April 2024 whereas it has delivered more than 15 percent return to the gold investors in YTD time. So, at this juncture, when the market experts are still expecting a bounce back in gold prices, it is important to know how the income tax rule applies to income booked from gold investments.

Gold price rally in recent intervals

Speaking on the gold price rally in recent time intervals, Anuj Gupta, Head of Commodity & Currency at HDFC Securities said, "In YTD time, gold rate today is higher by 9,500 per 10 gm from its 2023 close price of nearly 63,200 per 10 gm. This means gold prices have appreciated to the tune of 15 percent in YTD time. Likewise, in April 2024, gold prices have appreciated to the tune of 7.60 percent. However, in one year, the gold prices have surged by around 13,000 per 10 gm, which is around 22 percent higher from its price of around 59,500 per 10 gm a year ago."

Income tax rule for gold

Speaking on the income tax rules applicable to one's return from gold investments, Mumbai-based tax and investment expert Balwant Jain said, "If the investment is in physical gold, then there will be a different set of income tax rules applicable on one's income from gold. To calculate one's income from gold, one needs to look at the period of investment. If someone books profit in gold after holding it for less than three years, then the income tax will be calculated under the short-term capital gain rules whereas, for three years or above, the income tax will be calculated under the long-term capital gain rules."

Balwant Jain said that short-term gains on gold are added to the net income of an investor and the income tax is levied as per the income tax slab applicable in sync with one's net annual income. However, for long-term capital gains, income from gold is taxed 20 percent plus cess, which is 4 percent these days. However, Balwant Jain said that long-term capital gain on physical gold gets indexation benefit.

Income tax rule for gold ETF, digital gold

On the gold investment options other than physical gold, Sujit Bangar, Founder of Taxbuddy.com said, “A gold investor has an option to investment in other than phuysical gold as well. Such other than physical gold investment options include Gold ETF, Sovereign Gold Bond (SGB), gold mutual funds, etc."

On how digital gold investments are taxed, the Taxbuddy.com founder said, “As per the Budget 2023 amendment effective from 1st April 2023, debt mutual fund schemes will be subject to taxation at the income tax slab rates corresponding to your net annual income."

Income tax on income from SGB

"Redemption in SGB opens after give years of investment and money redeemed from SGB is 100 percent tax exempt. However, if you sell your position in exchange, then the short-term capital gain or long-term capital gain will be applied depending upon the period of holding," said Balwant Jain. He said that short-term capital gain will be applied in case the investor has held SGB for one year or lesser than one year time. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Asit Manohar
Chief Content Producer at Live Mint Digital Team
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Published: 22 Apr 2024, 12:28 PM IST
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