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 called a crisis companion and second insurance in India. That is why people have great affection for gold. If you are also planning to buy gold jewelery or coins this Dhanteras and Diwali, then first know how much tax will have to be paid. You will be surprised to know that tax is levied both when buying and selling gold jewellery.
Tax rules on gold jewelery
Long term capital gains (LTCG) and short term capital gains (STCG) have to be paid on gold. Budget 2024 has reduced LTCG on gold from 20% to 12.5%. So if you sell gold after keeping it for two years, you will have to pay 12.5% LTCG tax on the profit. However, Budget 2024 has removed indexation on gold investments. Hence you will no longer get the indexation benefits applicable to LTCG. For physical gold after Budget 2024, the holding period for STCG has been reduced from three years to two years.
Tax on gold mutual funds
Capital gains tax rules were changed after Budget 2024. According to the new rule, the holding period for short-term capital gains will be reduced in the new rule, but the tax rate will not change. For units of gold mutual funds purchased between April 1, 2023, and March 31, 2025, regardless of the holding period, the profit will be added to taxable income and taxed as per income tax slab.
Gold ETF
If you buy gold ETFs, the gains will be added to taxable income and taxed at applicable slab rates (irrespective of holding period). Remember that if you buy gold ETFs after March 31, 2025 and sell after 12 months, the gains will be taxed at 12.5% without indexation benefits.
Sovereign Gold Bond
while selling gold jewelery
The tax charged when selling gold jewelery depends on how long you kept it with you. While selling it, tax is imposed on the basis of short term capital gain or long term capital gain.
Tax on gold received as gift
People gift gold or jewelery to their relatives, friends and close ones on Dhanteras or Diwali. If you are receiving gold as a gift from family or relatives, you can get income tax exemption on it. If you receive a gold gift worth more than Rs 50,000 from someone else, you will have to pay tax. This income will be taxable as it will be considered as income from other sources.
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