When was the last time that you have asked for an investment advice and someone has suggested against buying gold? You can’t recall right? It is because Indians love gold. Indians don’t buy gold just for adornment purposes but because it is also seen as a way of preserving wealth. No wonder, we are the world’s second-biggest consumer of gold, after China. But did you know that this love for gold can cause you trouble? Well, let us tell you how.
How much gold you can keep at home?
Indians buy gold mostly as jewellery. So if you are also a physical gold lover, don’t worry, you can keep as much gold jewellery you want, at your home. But there is a catch. You must have to reveal the source of your money to buy gold to tax authorities if asked. Though there is no limit on gold possession if you received it through inheritance.
What if you are unable to reveal source?
But if you are not able to explain the source, then you are allowed to keep gold in your home to a certain limit only. A Married woman is allowed to keep up to 500 grams of gold at home. For Unmarried woman the limit is 250 grams. While men are allowed to keep just 100 grams of gold at home if they can’t reveal the source of money used to buy it.
Tax on gold purchase
Now let’s talk about the taxation part. According to the CBDT, you won’t have to pay income tax on gold purchases made with income that has been declared. It applies to money earned from agricultural activities, legally inherited money or with your savings as well. But remember you have to pay a GST of 3 percent on gold purchase plus making charges.
Capital gains on sales
Capital gains is calculated after deducting the purchase amount from the sale. It includes making charges or taxes levied while purchasing the gold. Gold sold before the end of three years from purchase then profit earned is called short-term capital gain (STCG). The STCG gets added to your income. It is taxed on the basis of individual slab rates under the Income Tax Act. If you sell the gold after three years of purchase, then that profit arising from such sale is considered long-term capital gain (LTCG).
Indexation benefit
The LTCG gets taxed at 20.8% which includes 20% tax and a cess of 4%. To cover inflation cost, indexation benefit is also available on LTCG. Indexation benefit adjusts the cost of investment for inflation. It covers inflation cost from year of purchase to year of sale by adjusting the price cost of purchase of gold amount.
You can keep as much gold jewellery you want, at your home. You must have to reveal the source of your money to buy gold to tax authorities if asked. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
